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JPM push forward forecast of first BoE hike 6-months to Q2-22

BOE
  • JP Morgan has revised its Bank Rate forecasts following this morning's labour market data and now sees the first 15bp hike in Q2-22 (from Q4-22) with the second 25bp hike in Q1-23 "which would also be when the BoE will stop reinvestments."
  • JP Morgan notes that with this morning's unemployment data "the only way for this metric to register a decline was for the single month unemployment rate for June to drop sharply. It did, with the cohort for that month showing a decline of 0.4%-pts to 4.4%. Unless this is an anomaly, it implies the official three month smoothed unemployment rate is on track to beat virtually all expectations and show a material decline in 3Q. The second point is that this would surpass even the BoE's relatively optimistic forecast."
  • "While the picture could still weaken in the coming months, the momentum evident in this report is enough for us to revise our unemployment rate forecast to show a decline to 4.5% in 3Q" and JP Morgan argue that "given the emphasis" the Bank has placed on labour market data, this is enough for JPM to change their BoE view.
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