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ECB Cut Pricing Deepens But Off Day's Extremes, BoE Implied Cuts Retrace


Implied ECB rate cuts deepened further Thursday on a second day of below-expected Eurozone inflation prints, but finished off dovish extremes. BoE rate cut expectations were pared slightly.

  • Market-implied 2024 rate cuts reached 114bp in early trade, a new cycle high, but faded to 108bp by the close.
  • The anticipated path includes a fully-priced rate cut by April 2024, with a second by July (and a high probability of a June reduction).
  • In contrast, BoE rate cut expectations for the year following the Feb / Mar 2024 peak were pared by 6bp to 93bp, with the first cut seen at the August MPC (was briefly seen at the April meeting) and a second by November.

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