Goldman Says BOE Likely to Ease Policy in Euro Crisis Response

Goldman Sachs Group Inc. (GS) said the Bank of England is likely to ease policy again in response to the mounting euro-area crisis, changing its previous forecast.

“The probability of further easing in the U.K. has increased markedly with the rapid escalation of the euro area crisis,” economist Kevin Daly in London said in a note today. “We expect the bank to supplement ‘conventional’ QE with specific actions to alleviate the funding conditions of U.K. banks. The question of how much the bank eases by is intrinsically linked to the question of how it eases.”

On the timing of any move, Daly said there “is a case for waiting until the August Inflation Report, but we think a July move is marginally more likely.”

To contact the reporter on this story: Scott Hamilton in London at shamilton8@bloomberg.net

To contact the editor responsible for this story: Fergal O’Brien at fobrien@bloomberg.net

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