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JP Morgan adds extra 25bp June hikes to ECB / BOE forecasts

EUROPE
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On Friday JP Morgan updated both its ECB and BOE rate forecasts:

  • For the ECB it looks for 50bp in March and 25bp in both May and June (the latter new) to a terminal rate of 3.50%. This is due to both stronger PMIs and firmer core CPI. "Both surprises bias the terminal rate higher, possibly by a lot."
  • JP Morgan also notes that they "will watch closely next week’s inflation report and the evaluation at the March meeting. That may give more clarity about the likelihood of a step down to a 25bp pace in May." JP Morgan still looks for ECB cuts beginning in 2024.
  • For the BOE, JP Morgan adds a 25bp hike in June to a terminal 4.75% (25bp in March, May and June). JP Morgan notes that both the PMI and consumer confidence were stronger than expected. "The message from the BoE is likely to remain cautious, but nevertheless shift incrementally as the data evolve. We still think the odds of a 50bp hike in March are low."
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On Friday JP Morgan updated both its ECB and BOE rate forecasts:

  • For the ECB it looks for 50bp in March and 25bp in both May and June (the latter new) to a terminal rate of 3.50%. This is due to both stronger PMIs and firmer core CPI. "Both surprises bias the terminal rate higher, possibly by a lot."
  • JP Morgan also notes that they "will watch closely next week’s inflation report and the evaluation at the March meeting. That may give more clarity about the likelihood of a step down to a 25bp pace in May." JP Morgan still looks for ECB cuts beginning in 2024.
  • For the BOE, JP Morgan adds a 25bp hike in June to a terminal 4.75% (25bp in March, May and June). JP Morgan notes that both the PMI and consumer confidence were stronger than expected. "The message from the BoE is likely to remain cautious, but nevertheless shift incrementally as the data evolve. We still think the odds of a 50bp hike in March are low."