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The Markets
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Bank of England likely to hold rates, first cut seen in May

The Bank of England's monetary policy committee is expected to keep interest rates unchanged for a fourth consecutive meeting at 5.25%.

Goldman Sachs expects a unanimous 9-0 vote although the split remains “difficult” to predict given limited recent commentary by MPC members, the bank said.

It said "a dovish dissent in the form of Dhingra voting for a 25bp cut and/or a hawkish dissent in the form of Mann voting for 25bp hike are possible".

But “we think hawkish dissents are less likely given that there has been a moderation in underlying services inflation since the MPC’s last meeting”.

The BoE has been among the more hawkish of the big central banks in the past few months, which has supported the pound.

"We expect them to stick to their hawkish message and not signal any rate cuts in the near future," said the UBS strategists.

Barclays is different, expecting the MPC to send a big signal that it could be ready to talk about cuts soon, suggesting the MPC will "begin the pivot towards talking about rate cuts by removing the hawkish bias in its guidance that 'further tightening in monetary policy would be required if there were evidence of more persistent inflationary pressures'".

Deutsche Bank economists similarly foresee a "subtle but important shift" in the forward guidance, with the MPC officially ditching its current tightening bias but keeping its higher-for-longer message as it continues to strike a cautious tone around the trajectory of rates.

Goldman, Barclays, Deutsche and UBS are all expecting a May rate cut, though there were suggestions that this could potentially slip to June if the MPC requires more evidence of a slowdown in pay growth and services inflation to start cutting.

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