BoE Terminal Rate Pricing In Familiar Territory

The latest round of U.S. banking sector worry coupled with BoE Governor Bailey telling BBG that the current hiking cycle could be near an end applied weight to BoE-dated OIS yesterday, after the initial knee-jerk move higher post-decision.

• BoE pricing still hasn’t regained pre-press conference levels, even in the presence of some hawkish Fedspeak and a recovery in e-mini futures.
• BoE Governor Bailey told BBG the following on Thursday:
• “We are approaching a point when we should be able to in a sense rest in terms of the level of rates. But we haven’t seen the evidence yet to give a stronger sense of the read of that, so that’s why I’m very clear that we have to be evidence driven.”
• When questioned on the proximity to a pause, he said: “Well, I’m going to say I hope we are because this is the 12^th consecutive increase in rates. But again, I’ll be very clear that we will be guided by the evidence.”
• He also flagged a focus on the persistence in inflation in the BBG interview, while referencing BoE expectations for a notable moderation in inflation during ’23.
• Eyes are on the usually hawkish BoE Chief Economist Pill, who will speak at 12:15 London.

Source: MNI - Market News/Bloomberg