According to ChainCatcher, Morgan Stanley expects the Bank of England to keep interest rates unchanged with a 6:3 vote. However, the policy wording may be adjusted in a dovish manner, suggesting that action may be taken in November.
"Taking into account all the data since August and the scale of existing restrictions, we believe that the market should price a slightly higher rate cut in September. But even so, we think the probability of a rate cut is no more than 30%." Morgan Stanley expects the size of the Bank of England's QT next year to be 100 billion pounds, compared with 90 billion previously, but still believes that the risk is tilted towards lower. "November is a key meeting of the Bank of England this year, and we expect it to lay the foundation for a faster pace of rate cuts as the anti-inflationary momentum of service prices is strengthening. We expect rate cuts in November and December, with the bank rate reaching 3.25% by August next year."
