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Expected market reactions

BOE
  • Recall that the BOE policy decision will be announced at 12:00BST / 13:00CET / 7:00ET alongside the Minutes and MPR. The press conference is due to begin 30 minutes later.
  • Markets pricing in 45bp for today's meeting (around an 80% probability of a 50bp hike, with 25bp more than fully priced in). Further out, there is 91bp cumulatively priced for September, 129bp for November, 159bp for December and 174bp for February 2023 (peak in March/May 2023 at 179bp priced).
  • In terms of immediate market reactions:
  • 25bp is likely to be considered dovish whatever vote split and language it is accompanied by.
  • 50bp will depend on the vote split/forward guidance:
    • 50bp with a 7-2 (or greater) vote split would be considered hawkish – this is probably the market consensus but would probably still see a hawkish reaction as the market’s view was confirmed.
    • 50bp with a 6-3 vote split with the word “forceful” remaining would also be hawkish.
    • 50bp with 6-3 without forceful or a 5-4 vote for 50bp could see markets move either way depending on other factors in our view. Note that this is Saunders' last meeting - and as he is expected to be among the members voting for a 50bp hike today (and Dhingra's views are less certain, but at first glance seem less hawkish), a close vote could suggest to the market that any further 50bp hikes may be unlikely.
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