Bank Of England Keeps Stimulus On Hold

It will publish review on forward guidance on August 7, with the inflation report.

This was in line with expectations.

In the July MPC statement we received a strong hint that any announcement on forward guidance would come with the inflation report on chancellor George Osborne's insistence.

In a note published ahead of the BoE announcement, Societe Generale's Brian Hilliard pointed out that if we do get forward guidance it will be "state-contingent" guidance.

"The fact that the Chancellor’s request was framed in terms of assessing the merits of using intermediate thresholds being reached for some particular economic indicator points to the “state-contingent” approach being favored by the MPC."

The consensus is that unemployment rate or nominal GDP growth are the top contenders for the choice of the threshold.