BREAKING: BoE holds rates as expected

 - BoE decision on interest rates. Actual: 5.25%. Expectations: 5.25%. Previously: 5.25%.

• Distribution of bankers' votes (hike-hold-lower). Actual: 0-7-2. Expectations: 0-8-1; Previously: 0-8-1.

The decision was received dovishly by the market, which is related to the details of the decision and the statement:

• Ramsden voted in favor of the cuts, as well as Dhindra
• Risks from inflation persistence are receding
• Inflation projections are lowered by BoE

We have an open door to an interest rate cut in June. It is worth mentioning that April inflation is likely to be on target, due to energy price cuts. The market is now pricing that the first cut could take place in June.

Key changes in economic forecasts:

• BoE estimates GDP +0.4% qq for q1 2024 (march forecast: +0.1%), sees +0.2% qq in q2 2024 
• BoE forecasts GDP in 2024 +0.5% (feb: 0.25%), 2025 1% (feb: +0.75%), 2026 1.25% (feb: 1%)
• BoE forecasts unemployment rate in q4 2024 4.4% (feb: 4.6%); q4 2025 4.7% (feb: 4.9%); q4 2026 4.8% (feb: 5.0%)
• BoE estimates wage growth +5.25% yy in q4 2024 (feb: +4%), q4 2025 +2.25% (feb: +2.75%); q4 2026 1.5% (feb: +1.75%)
• BoE forecasts real post-tax household income in 2024 +1.75% (feb: +0.5%), 2025 +1% (feb: +0.25%), 2026 0.5% (feb: 0%)

Source: BoE

Source: xStation