BoE: Another rate hike coming in May – Danske – by MSalordFX BOE Banks
th and domestic inflation having surprised to the upside and given BoE’s message, they pencil in an additional 25 bps hike in May 2023.“As the 25bp hike was fully priced in by markets, the market reaction upon announcement was limited. 10-30Y was close to unchanged while 2Ywere a few basis points lower. The market pricing of the peak policy rate was pushed slightly lower to 4.5% in August .”
“We revise our call to expect the BoE to deliver a final 25bp hike in May. Our expectations are in line with current market pricing as we expect the rest of the BoE committee to increasingly turn less hawkish amid a weakening growth backdrop and easing labour market conditions. Markets are pricing in 30bp of cuts during H2. We still believe that the first rate cuts will not be delivered before the beginning of 2024.
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