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Rupiah Goes Offered Amid Omicron Worry

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  • Barclays now looks for a 15bp hike in December followed by 25bp hikes in both February and May. "Our call also implies that the Bank could let its QE portfolio run down passively as of February, and we expect the first significant redemptions in March."
  • Previously it looked for no rate hikes before the end of 2022.
  • "The MPC will not hike in November. This has been repeatedly ruled out and would be an unreasonable risk, in our view, as labour market and population data are due to be published just after the November meeting but in time for the December meeting."
  • "The hiking window will close soon after it opened as we continue to believe that, fundamentally, the current situation does not warrant any substantial reaction."
  • "We argue that this call is mostly driven by the MPC's interpretation of underlying factors and risks rather than headline data. Hence, we can assume that the BoE is set to hike regardless of data in the early stages of its cycle."
  • Barclays also notes that it sees a "prolonged status quo thereafter" and "pronounced risks of rate cuts in 2023."