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MNI BOE Review - August 2022: "Forceful" remains

The Bank of England raised Bank Rate by 50bp to 1.75% - a move that we had assigned a subjective 70% probability to. The vote split was 8-1 with only Tenreyro dovishly dissenting (and instead preferring a 25bp hike).

  • At the August MPC meeting, the Bank of England raised Bank Rate by 50bp to 1.75% - a move that we had assigned a subjective 70% probability to, markets had been pricing at about an 80% probability, and a move that 64% of the 22 analyst previews that we had read before the meeting anticipated. The vote split was 8-1 with only Tenreyro dovishly dissenting (and instead preferring a 25bp hike).
  • We talk through the three notable factors in the outlook (formerly "guidance") language.
  • Analysts are now expecting a higher Bank Rate in 2022, but expectations for 2023 are little changed, with 8/18 analysts now expecting cuts in 2023 (and the market fully pricing a 2023 cut).
  • Despite this, we still think market pricing for 2022 is too high - and the MNI Markets' team's base case is for a 50bp September hike followed by a 25bp November hike.
  • The Bank also set up September by setting out, in great detail, the modalities of its active gilt sales programme.
For the full document including summaries of over 20 sell side view see:

MNI BoE Review - Aug22.pdf

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  • At the August MPC meeting, the Bank of England raised Bank Rate by 50bp to 1.75% - a move that we had assigned a subjective 70% probability to, markets had been pricing at about an 80% probability, and a move that 64% of the 22 analyst previews that we had read before the meeting anticipated. The vote split was 8-1 with only Tenreyro dovishly dissenting (and instead preferring a 25bp hike).
  • We talk through the three notable factors in the outlook (formerly "guidance") language.
  • Analysts are now expecting a higher Bank Rate in 2022, but expectations for 2023 are little changed, with 8/18 analysts now expecting cuts in 2023 (and the market fully pricing a 2023 cut).
  • Despite this, we still think market pricing for 2022 is too high - and the MNI Markets' team's base case is for a 50bp September hike followed by a 25bp November hike.
  • The Bank also set up September by setting out, in great detail, the modalities of its active gilt sales programme.
For the full document including summaries of over 20 sell side view see:

MNI BoE Review - Aug22.pdf