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JP Morgan now looks for 40bp by Feb

BOE
  • JP Morgan has revised its BoE rate hike expectations and now looks for 15bp in November followed by 25bp in February and another 25bp in August (previously 15bp in February and 25bp in August). Reinvesting gilts to end at 0.50% as previously outlined (which would see the March 2022 gilt proceeds not reinvested).
  • JP Morgan notes the risk to their call being the first 15bp hike delayed until December.
  • "The comments create yet further confusion about what the BoE is really trying to do... On the surface one could argue that there is nothing in Bailey's remarks that directly address the exact time, magnitude or speed of rate increases through time. But the comments come against a backdrop of market rate expectations which had already been quite aggressive as of last week."
  • "We expect the pace of tightening to slow after February due to balance sheet unwind and our assumption wage growth will not prove strong enough to prompt a stronger BoE response."

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