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BofA: See two hikes in 2022

BOE
  • “BoE hiked because of supply pessimism, signalling very low neutral rate.”
  • “Economic data this week - hawkish inflation and labour market data - appears to have dominated the BoE's thinking. Today the BoE worries more about the risks of a 6% inflation peak feeding into wage pressures than it does about the likely large hit to consumer spending next year or Omicron risks.”
  • “Though the market saw this as a hawkish hike and our proprietary BoE mood indicator based on natural language processing of the BoE's minutes suggests the BoE remains very hawkish, we are not so sure. The phrase that stood out to us most in the minutes was "modest hikes over the forecast period".”
  • “15bp hike keeps the door open for a £28bn March Gilt run-off.”
  • “We now expect 25bp hikes in February and November 2022, from May 2022 and February 2023 before.”
  • “We see one-sided risks to our call for the next hike. The BoE did not guide to another hike in 'coming months' as it did in November. The BoE cannot hike earlier and we think it's unlikely that they hike more than 25bp in February, for instance.”
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