BofA analysts say the Bank of England is unlikely to follow the ECB with a rate
hike on Thursday and a hold would probably not materially undermine confidence
in the pound. Markets are watching for a potential ECB policy misstep.
Energy-driven second-round effects will be closely monitored and should support
further BoE tightening, but a balanced stance weighing high inflation risks
against weakening employment would be market-friendly. If price shocks persist
the BoE could be seen as falling behind, though BofA does not view that as the
current situation; it expects the BoE to hold on Thursday and hike in July and
September.
