Bank of England set to keep stimulus pumping despite inflation rebound – Reuters

Early Thursday morning in Asia, Reuters came out with the piece suggesting the Bank of England’s (BOE) sustained support for easy money policies despite laying out a plan for tapering during today’s Super Thursday event.

Key quotes (from Reuters)

The Bank of England is expected to keep its huge support for Britain's economy running at full speed on Thursday, despite a strong recovery from its pandemic slump and a jump in inflation.

However, the central bank might also start to lay out its plan for how it will eventually reverse its stimulus.

Inflation jumped to 2.5% in June and the BoE will say in a new set of forecasts that it is on course to rise even further about its 2% target in the months ahead.

But economists polled by Reuters expect the BoE will keep its benchmark interest rate at its all-time low of 0.1% and leave its bond-buying program on course to reach its 895 billion-pound ($1.24 trillion) target size by the end of this year.

The bigger risks, they say, are that unemployment rises more sharply than expected as finance minister Rishi Sunak's jobs subsidies are phased out by the end of September and that the recovery buckles due to the spread of the Delta variant of the coronavirus.

BoE officials have said they will publish ‘soon’ new guidance on how they might sequence raising rates with reducing the bond stockpile. Many economists expect the plan will be announced on Thursday.

FX implications

GBP/USD remains pressured around a weekly low under 1.3900 amid the pre-BOE caution during the “Super Thursday”.

Read: GBP/USD Price Analysis: Teases bearish cross below 1.3900 on BOE Super Thursday