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Free AccessBoE Terminal Rate Pricing Hits 6.50%
Pay-side flows leave BoE-dated OIS pricing a terminal policy rate of 6.50%, with yesterday’s move extending.
- Some have pointed to a note from J.P.Morgan re: the potential for the BoE policy rate to hit 7% as a driver for yesterday’s move. While the piece did get a broader airing on BBG on Wednesday, we flag that it was released on Friday and was perhaps a little more caveated than some suggest. The piece noted that J.P.Morgan “see 5.75% peak rates by November, but absent an adverse global growth shock, rates could go higher. Delaying a necessary tightening risks more ultimately needing to be delivered... as an increasingly domestic inflation problem risks becoming more entrenched. We use two metrics to show how rates could reach 7% under some scenarios.”
- The lack of meaningful receiver-side flow is still noted by participants.
- Early Thursday comments from BoE Governor Bailey did little to placate hawkish pressure, as he stressed that inflation is way too high, although he does expect quite a marked fall in price pressures. He also reiterated that getting inflation down is the most important thing for the Bank. The Bank continues to refrain from providing clear guidance on the expected policy rate path.
- The latest BoE-decision maker panel survey will cross later today.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference Vs. Current Effective SONIA Rate (bp) |
Aug-23 | 5.386 | +45.6 |
Sep-23 | 5.780 | +85.1 |
Nov-23 | 6.097 | +116.7 |
Dec-23 | 6.309 | +138.0 |
Feb-24 | 6.403 | +147.4 |
Mar-24 | 6.431 | +150.1 |
May-24 | 6.4205 | +149.1 |
Jun-24 | 6.383 | +145.4 |
To read the full story
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.