Hints and tips:
...Last week the BoE kept rates at 5.25 per cent for a fifth consecutive meeting, as widely expected....
...UK government bonds began selling off as traders absorbed the BoE’s decision to hold rates, after two rate setters voted for a rate rise when only one was expected....
...After the data release, sterling slipped 0.15 per cent against the dollar to $1.2792 while traders in swaps markets boosted their bets on the BoE easing policy this year....
...But while inflation is expected to soon fall below the BoE’s 2 per cent target, there are clouds on the horizon for the chancellor....
...Other economists believe a delay by the Federal Reserve in cutting rates in the US could reduce pressure on the BoE to do the same in the UK....
...It remains well above the level that would be comfortable for the BoE....
...The moves come ahead of the BoE’s policy meeting on Thursday, when rate-setters are widely expected to keep the benchmark rate at 5.25 per cent....
...Hugh Gimber, global market strategist at JPMorgan Asset Management, said that while it was good news for consumers that wage growth was now comfortably outpacing inflation, the BoE would view the data “through...
...“This should allow the [BoE Monetary Policy Committee] to comfortably adjust the degree of restrictiveness in monetary policy from as early as Q2 2024,” said Sanjay Raja, chief UK economist at Deutsche Bank...
...Before futures markets opened, traders in swaps markets were betting on 0.72 percentage points of BoE interest rate cuts this year....
...On Tuesday, however, the BoE released updated estimates based on current market expectations for the path of interest rates....
...Markets moved to price in close to three quarter-point rate cuts by the BoE this year, up from nearer two before the ONS release....
...Pill said that current market pricing for the BoE’s first rate cut in August 2024 “doesn’t seem totally unreasonable” but added that “if we have the restrictive policy for too long, then the danger is ....
...Mary McDougall...
...Markets are betting on 0.68 percentage points of cuts from the BoE this year, and 0.90 percentage points from the European Central Bank, down from more than 1.5 percentage points for each at the start of...
...Additional reporting by Mary McDougall...
...The BoE is also selling £100bn of gilts in the second year of its bond sales programme....
...Unlike the Fed, the BoE and ECB do not publish predictions for long-term interest rates....
...Despite the uptick to 4 per cent in December, price growth was still below the BoE’s latest forecasts....
...The BoE signalled Hunt’s decisions had not made a big difference to its inflation outlook....
...“The data today will make the BoE’s monetary policy committee more cautious,” said Tomasz Wieladek, chief European economist at T Rowe Price....
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