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MNI BOE Review - November 2022: Forward non-guidance

BOE
  • The MPC voted to raise Bank Rate by 75bp in line with the MNI Markets’ team and consensus view. Markets had been pricing in 70bp immediately ahead of the decision. Dhingra and Tenreyro both dovishly dissented as we expected (voting for a 50bp and 25bp hike respectively).
  • The Bank is guiding for further rate hikes but also for a terminal rate below 5.25%. However, market rates were already well below 5.25% at the time of the meeting - so the BOE's guidance was pushing back against a rate path the market had already moved away from.
  • It seems to us as though the Bank left things deliberately ambiguous - while trying to limit any further increases in mortgage rates. Both because of a range of views on the MPC and due to the uncertainty of the economic outlook, the labour market, fiscal policy and the replacement for the energy price guarantee.

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