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First React

BOE
  • 4 members voting for a 50bp hike is hawkish.
  • This increases the chance of a March hike and a May hike.
  • But the 1.60% market forecast for CPI in 3-years time is much lower than expected.
  • So this looks as though the Bank are going with the message of more hikes up front, but less overall. (However, the less overall is never going to be discounted by markets as much as the near-term outlook).
  • There is active QT in the form of corporate bond sales, but the BOE notes this should not be seen as a message that gilt sales will begin before Bank Rate is at 1%: The Bank "Should initiate a programme of corporate bond sales to be completed no earlier than towards the end of 2023 that should unwind fully the stock of corporate bond purchases."

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