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Broadbent subtly hints at downside risks to market pricing

  • Broadbent is describing the risks to market pricing as more to the downside here - but not directly saying market pricing isn't appropriate. So it's more on the dovish side - but I wouldn't say it's strongly dovish (although relative to most of this comments its more to the dovish side too). Some moves higher in gilts seem appropriate here, but we are already off the highs.
  • "Whether official interest rates have to rise by quite as much as currently priced in financial markets remains to be seen."
  • So overall he is pretty non-committal in terms of the appropriateness of market pricing here - but definitely pointing to the downside. Being non-committal is typical Broadbent - he often plays his cards close to his chest ahead of MPC decisions.
  • He is still calling for higher rates: "The justification for tighter policy is clear. It remains the case that most of the overshoot in headline CPI inflation, relative to target, reflects the direct impact of higher import prices. It also remains likely that much of this is likely to fade as those prices stabilise."

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