Closer than it looks

Downgrades to the Bank of England’s inflation projections in its Inflation Report last week were widely anticipated. Nonetheless, sterling’s tumble against the dollar and the euro after its release suggests that the “Super Thursday” announcements from the MPC still managed to surprise many with its dovish tone. Although the decision is likely to be sooner than the markets think, an imminent rate rise is not likely either. We remain comfortable with our view that rates will not rise until Q2 of next year.