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1st take: No hike, but not as much pushback on market pricing as expected

BOE
  • "As had been signalled previously, there was value in waiting for additional information on near-term developments in the labour market, including official data relating to the period following the end of the CJRS, before deciding when a tightening in monetary policy might be warranted."
  • However, the inflation forecast on the 3-year horizon at market rates is 1.95% - so even with the 1.25% Bank Rate in a year's time inflation is only marginally below target.
  • This in effect partially endorses market pricing. We are seeing an immediate rally in short sterling (strip up about 7 ticks after the decision in addition to this morning's moves) and selloff in the pound, but these are unlikely to be much smaller moves than they could have been if that inflation forecast was lower.
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