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Daiwa: Weak growth to potentially lead to 2023 cuts

  • “We now look for further hikes of 25bps apiece at the next two MPC meetings in March and May, to take Bank Rate to 1.0%. That might also trigger the start of active BoE gilt sales before the summer. At least one further hike in the second half 2022 might also be forthcoming. However, with economic growth expected to be weak thereafter, if energy prices follow the path set out in forward markets, we would then not be surprised to see Bank Rate cut before the end of 2023 and into 2024.”
  • Daiwa’s base case sees 25bp hikes in Mar-22, May-22 and Aug-22 with one 25bp cut in 2023 for Bank Rate to end the year at 1.00%.

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