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BOE
- There is also quite a split amongst analysts around where the Bank's new inflation forecasts will settle.
- The table below shows sell side expectations of the modal inflation foreasts 1/2/3-years ahead (generally for Q1-25/Q1-26/Q1-27 but for some analysts Q4-24, Q4-25 and Q4-26).
- The median expectation for the 3-year ahead number is 1.9% with the mean of these estimates 1.86%.
- However, there are some who expect the Bank to effectively endorse market pricing here by forecastsing inflation above 2% in 3 years while others expect push back through the forecasts with lower forecasts.
- Another question will be the skew. On this, too, there are a variety of estimates - particularly given the added uncertainty from the March Budget and trade disruptions in the Red Sea. On balance from the previews that we read we think the median expectation would probably see the skew halved (from around 0.4ppt).
- The skew itself could still turn out to be an important communication tool for the Bank here. If they want to push back on more hike they can leave the skew higher and if they are more comfortable with market pricing the skew might be lower (depending of course where the modal forecasts come out).
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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