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MNI BOE Review - May 2023: Mean forecasts in focus

BOE
  • Yesterday we published our BOE Review.
  • The 25bp hike, 7-2 vote and lack of change in guidance was in line with expectations, albeit some including us had seen a risk of a softening of the guidance.
  • The main takeaway for us was the shift in emphasis to the mean CPI forecasts (rather than emphasis on the modal forecasts).
  • It seems to the MNI Markets team that through this communication, the MPC has implicitly validated the market pricing that was used to produce these forecasts.
  • The MNI Markets team therefore looks for a further hike in June, albeit with less conviction than the 85% probability priced in by markets are present.
  • We have read through over 20 analyst reviews and consensus has also shifted to looking for a final hike in June, which would bring the terminal rate to 4.75%.
  • For the full MNI BOE Review click here.

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