No Move by the BOE After the UK Elections

• Haskel and Saunders dissented, voted to cut the bank rate by 25 bps
• BOE says can’t tell yet how much policy uncertainties have declined since election
• Sees continued signs that UK labour market is loosening but it remains tight
• Partial de-escalation of US-China trade war gives some additional support to outlook
• If global growth fails to stabilize or Brexit uncertainties remain entrenched, monetary policy may need to reinforce expected UK recovery
• Further ahead, if risks do not materialize and economy recovers broadly as expected, some modest tightening of policy – at gradual pace, limited extent – may be needed

It is the same old stuff, so not much news here, which is actually a good thing for the GBP. Traders have been expecting the BOE to start easing the monetary policy, after elections provided some clarity for the UK politics and Brexit, since the economic weakness has increased in the UK in recent months.

But, the BOE can’t tell how much the uncertainty has declined after the elections, so if they are to make a move, it will come after a few months when things become clearer. The GBP jumped 70 pips higher after the meeting, which shows that markets are expecting the BOE to turn dovish at some point.