The Bank of England (BoE) today made a not-so-subtle attempt at getting the market ready for an imminent interest rate rise. In the minutes of today’s 7-2 vote it was noted that “a majority of MPC members judge that…. some withdrawal of monetary stimulus is likely to be appropriate over the coming months….”. From previous statements the BoE Chief Economist Andy Haldane has made, the rate rise would be more about removing stimulus added in the wake of the Brexit vote rather than the start of a hiking cycle.
That is the communication tightrope they will have to walk going into the November Quarterly Inflation Report. Do they go down the “one and done” Haldane view? Or do they have the confidence in the economy (and more to the point that wages will finally rise) that means a full-blown rate hiking cycle in the coming months? Of course “coming months” could include February 2018, but either way it is the most explicit the Bank can get in paving the way for a decision.
What should be certain is that we will all be pouring over the MPC members’ speeches in the run up to November. Given that this could be the first increase for 10 years, the Bank will want the market to be fully prepared.