August 16, 2023 16:36 GMT
BoE Peak Edges Back Above 6.00% On CPI; ECB Sept Hike Seen Above 50%
BoE and ECB peak rate pricing both increased for the 3rd session in 3 this week, with the former leading the way higher once again.
- BoE terminal Bank Rate pricing +4.3bp to 6.03% (78bp of further hikes left in the cycle to Mar 2023) Above-expected UK core CPI kept up the hawkish momentum in peak BoE pricing, which is now up 30bp since last Thursday and closed above 6.00% for the first time since July 18. Pricing for the next BoE meeting is for 32bp in hikes (around 30% prob of a 50bp raise vs 25bp), with 53bp cumulatively expected through the next two meetings.
- ECB terminal depo Rate pricing +0.5bp to 3.96% (21bp of further hikes left in the cycle to Dec 2023). Once again, ECB peak pricing remained relatively anchored, just below 4%, but edged higher for the 8th session in 9. More interestingly, September hike pricing ticked up today more than the terminal rate (+1bp), with a 25bp hike now more likely than not (about 55% probability).