BoE Pricing Briefly Threatens Mini-Budget Extremes

Oil price dynamics and a lack of meaningful receiver-side flows allowed BoE-dated OIS to show terminal policy rate pricing above 6.35% at one point, before a move back from the session’s hawkish peak. The hawkish mini-Budget era extremes weren’t quite breached on the move (per BBG data). The higher than previous Citi/YouGov 1-Year inflation expectations data would have also factored into the hawkish repricing, although 5- to 10-Year inflation expectations within the same survey moderated a touch. Terminal BoE policy rate pricing now resides around 6.33%, with ~46bp of tightening showing for August’s gathering and a cumulative ~85bp of tightening showing through September.