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Berenberg expect first hike in Dec but its the path not timing that matters

BOE
  • Berenberg now look for the first 15bp hike from the Bank of England in December (previously February). Look for 25bp more in February and third 25bp hike in H2-22 to 0.75% (previously 0.50% by end-22). Berenberg also looks for a further 50bp of hikes in 2023.
  • "Is a November hike possible? Yes, but not likely."
  • "It will not matter much whether the first 15bp hike comes in November, December or February. What matters more is whether the BoE follows the tightening path projected by markets thereafter."
  • "The BoE has signalled that it could start to passively reduce its stock of assets once the bank rate reaches 0.5%. It will probably want to see how far and fast financial conditions tighten in response to its balance sheet unwind before recommencing rate hikes... If the BoE starts its balance sheet unwind in mid-2022, factoring in a temporary pause in rate hikes suggests that market expectations of a 1.25% bank rate by end-2022 are probably 50bp too high and maybe even 75bp too high."
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