Economics & Growth | Monetary Policy & Inflation | Rates | UK
BoE Preview: 25bp Hike With Upside Risk, but Terminal Is Close
- By Henry Occleston
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- 7 min read
Summary
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- We expect the BoE to hike the bank rate by 25bp to 5.25%.
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- The case for a 50bp hike remains, we assign a 40% probability to the outcome, while the case for pausing now is strengthening, but remains a tail-risk.
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- If they were to hike 50bp, we would expect to see it come alongside a strongly dovish tone. As such, we would see value fading any hawkishness that might get priced afterwards.
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- The MPR update should see inflation forecasts revised down and unemployment forecasts revised higher.
Summary
-
- We expect the BoE to hike the bank rate by 25bp to 5.25%.
-
- The case for a 50bp hike remains, we assign a 40% probability to the outcome, while the case for pausing now is strengthening, but remains a tail-risk.
-
- If they were to hike 50bp, we would expect to see it come alongside a strongly dovish tone. As such, we would see value fading any hawkishness that might get priced afterwards.
-
- The MPR update should see inflation forecasts revised down and unemployment forecasts revised higher.
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