Bank of England Expected to Raise Growth Forecasts on Thursday

It’s been more than seven months since the UK voted to leave the European Union in a referendum that will change the shape of the country for years and despite strong warnings in the run up to the vote, the economy is still ticking along nicely.

This should make Super Thursday another interesting affair for Bank of England Governor Mark Carney as he faces the very journalists he delivered those warnings to and has since faced some tough questions from.

The central bank is expected to upgrade its growth forecasts again following the meeting which will most likely invite yet more questions of credibility for the BoE, the only addition this time being that inflation is rising and fast. What approach will Carney take on Thursday?

Before we get to the press conference, it is first worth noting that we’re not expecting any changes in interest rates or asset purchases from the BoE on Thursday, or at any point in the near future for that matter. What we would like to know is when we can expect a change and in what direction will that likely be.

During his last Super Thursday appearance Carney indicated that the central bank has a neutral position on interest rates which would suggest the next is as likely to be a hike as a cut. While I’m sure a hike would be the less desirable option given the cloudy economic outlook, if inflation keeps rising the central bank may be left with little option. It may well depend on how much the central bank is willing to look through the temporary factors, such as rising commodity prices and rapid sterling depreciation.

It will be interesting to see how Carney and the rest of the Monetary Policy Committee weigh up the current resilience in the economy with the inflation and growth outlook, and the downside risks it likely still believes will materialise.

Despite the acknowledgement that growth is expected to be h