Zhitong Finance learned that the Bank of England will announce the interest rate resolution tonight. Economists and markets are expected to maintain the benchmark interest rate at 5.25%. The Governor of the Bank of England, Bailey, will hold a news conference after the interest rate resolution is announced, which may send a stronger signal to the market, suggesting when the Bank of England may lower the benchmark interest rate from the highest level in 16 years.

Bailey's previous speeches have reflected his shift to a dove stance. Therefore, Bailey may provide more clear information to the market to explain whether he expects to start easing at the June or August policy meeting. However, Bailey faces internal divergences in the Monetary Policy Committee over when to take action. On the eve of the UK general election, the central bank governor also faced growing political pressure. UK Chancellor Hunt has mentioned the possibility of a rate cut many times, saying it would be a "feel-good factor" for voters.

Monetary Policy Committee divergence

Although most of the nine members of the Monetary Policy Committee of the Bank of England are expected to vote to maintain the policy unchanged, more dovish opponents may join Swati Dingra to support a rate cut. Bank of England Deputy Governor Dave Ramsden is considered the most likely to join Swati Dingra's voting camp, showing a dovish tendency in his recent speech.

Serious divergence in the timing of future rate cuts may be highlighted at the meeting. Policy makers such as Catherine Mann, Jonathan Haskel, and Megan Greene have said they are unwilling to support rapid rate cuts, citing strong wage growth and service sector inflation.

Provide guidance

Since the March meeting, Bailey and Dave Ramsden's dovish comments have led to speculation that the Bank of England may start cutting interest rates in June or August. Both have recently distinguished Britain's inflation from that of the United States and compared Britain's situation to that of the euro zone. It is expected that the European Central Bank will begin easing next month.

In March of this year, the Monetary Policy Committee of the Bank of England added new wording, acknowledging that even if interest rates were cut, policy could still remain restrictive. If the Bank of England wants to prepare the market for a rate cut in June, it may take further action on Thursday. Although some economists believe that this may cause the Monetary Policy Committee to state in its guidance that they prefer to cut rates "in the coming months", other economists believe that the Monetary Policy Committee will be more cautious in its wording.

UBS analyst Anna Titareva said: "We believe that if the Monetary Policy Committee sees June as a possible time to cut interest rates, it may need to outline more evidence needed for June at Thursday's meeting."

Inflation and growth forecast

Another clue to understanding the Bank of England's thinking will come from the latest inflation forecast. If the Bank of England thinks that the market is too cautious about the timing and scale of future interest rate cuts, it can indicate this by showing the target of inflation below 2% in the next few years.

After the economy in 2024 started stronger than expected, the Bank of England may also raise its growth forecast. Policymakers had expected the UK's GDP growth rate in the first quarter to be only 0.1%, but economists believe that data to be released on Friday will show a quarterly GDP growth rate of 0.4%. In addition, a business survey shows that the momentum of economic growth has continued into the second quarter.

Ruben Segura-Cayuela, an analyst at Bank of America, said: "We expect the Bank of England's new forecast to show slightly better economic growth and more encouraging inflation trajectory."

Market expectations

If the Bank of England's guidance or forecast is more dovish, it may cause bond traders to increase their bets on an earlier rate cut by the Bank of England. The currency market currently expects the Bank of England to start cutting interest rates in August and expects a 40% chance of a rate cut in June, with two 25 basis points rate cuts this year.

Matthew Landon, a global market strategist at JP Morgan Private Bank, said: "'Too early, but getting closer.' This is the message we expect the Bank of England to convey tomorrow." "This year's strong start to the UK economy means the Bank of England is likely to cut interest rates for the first time in August, but we would be surprised if Bailey did not consider a rate cut in June."

6月に英国の中央銀行が利下げの兆候を示すと、英ポンドは圧力を受けて、英国の債券はサポートされる可能性があります。今年早い時期、英国中央銀行が2024年までに6回も利下げすることに賭けられなくなった取引によって、英国債券は売られ、通貨政策に敏感な2年間の英国国債利回りは4.3％前後にありました。

アルゴ取引

英国の中央銀行は、量的緩和に関して9月までに決定を下す予定ですが、より多くの人々が英国の中央銀行が今年後半に債券の縮小を停止することがあるのではないかと推測しています。英国中央銀行は現在、積極的な売却と債券が満期になった場合の組み合わせを含め、英国政府債券の持ち株を年間1000億ポンドのペースで縮小しています。

経済学者たちは、英国中央銀行が利下げを開始するにつれ、積極的な売却を今年後半に終了する可能性があり、ドイツ銀行のチーフエコノミストであるSanjay Raja氏は、次のように警告しています。「積極的な量的緩和は、金融環境の引き締めを悪化させる可能性があり、それは英国中央銀行の主要な通貨政策の乗数効果と反対になります。」