With the U.K.'s formal departure from the European Union looming on Friday, the Bank of England interest rate decision comes at a pivotal moment for the British economy. The current base rate sits at 0.75%.in 2019, the market is split almost 50-50 on whether the nine-member Monetary Policy Committee will vote to follow suit.
Two policymakers, Michael Saunders and Jonathan Haskel, voted to cut rates in both of the last two MPC meetings in November and December, while a further two, Gertjan Vlieghe and Silvana Tenreyro, have indicated following weak GDP figures that they could vote to cut unless subsequent economic data showed sufficient improvement.
Vlieghe and Tenreyro are therefore likely to remain on hold for now, according to Berenberg Senior Economist Kallum Pickering. "However, the sharp — but short-lived — deterioration in survey data after the 2016 EU referendum may cast some doubt in the minds of policy makers over the durability of the post-election bounce," Pickering said in a note Monday.
Berenberg economists see a 40% chance that a majority of the MPC votes to cut rates, while estimating that the market currently prices in around a 54% chance of a cut compared to 70% two weeks ago.
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