Bailey says that vaccine news starts to reduce the weight of uncertainty
- Today’s GDP data was in line with where we thought it would be
- We’ve had a strong recovery, but there is still a huge gap
- The recovery has been very uneven
- Vaccine news is encouraging but broadly consistent with forecast assumptions
There is more to the headline reading than meets the eye, as the optimistic vaccine rhetoric provides some justification for the BOE to keep acting coy when it comes to communicating about the possibility of negative interest rates.
That is proving very much to be a balancing act for BOE policymakers now but despite positive vaccine developments, Brexit uncertainty is also still a downside risk to consider.