BoE: Seen on hold as data soften – Societe Generale

Finance

BoE: Seen on hold as data soften – Societe Generale

Societe Generale analysts note a quiet week for the UK, with the March RICS housing survey pointing to weaker demand as higher energy costs and mortgage rates weigh on confidence. They highlight upcoming Bank of England (BoE) speeches before the 30 April MPC meeting, where it expects rates to stay on hold, and projects a modest 0.1% monthly rise in February Gross Domestic Product (GDP) alongside close monitoring of the BRC March retail sales index.

BoE communication and soft UK data

“Last week in the UK was fairly quiet. On the data front, the March RICS housing survey showed a slowdown across most components, reflecting the hit to consumer confidence from the ongoing energy shock, the withdrawal of numerous mortgage deals, and rising mortgage rates.”

“Against our expectations, the Bank of Englands Credit Conditions Survey ran from 23 February to 13 March and therefore captured the energy shock. However, the survey still indicated that banks expect demand for, and the availability of, secured household and corporate credit to increase in 2Q26. This seems unlikely given the material tightening in financial conditions and the decline in confidence associated with the ongoing energy shock.”

“This week in the UK brings a flurry of speeches from BoE members, including Bailey, Greene, Taylor, and Mann. These are likely to be the final public remarks ahead of the blackout period for the 30 April MPC meeting, where we expect the Committee to remain on hold. Last week, Bailey pushed back against market pricing of rate hikes, although around 40bp of hikes are still priced in.”

“Given the tentative ceasefire agreement, it will be interesting to see whether Taylor, who is one of the more dovish members, signals openness to a rate cut as early as the April meeting. ”

“On the data front, we project a modest 0.1% mom increase in February GDP. More importantly, the BRCs March retail sales index will provide an update on how well the consumer is holding up amid higher fuel costs and falling confidence.”