Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
Executive Summary:
- Tighter policy has been well signposted for the June meeting
- Board may opt for faster, not larger, rate hikes
- Path projections likely to show policy above neutral by year-end
Tighter policy has been well signposted for the June meeting, with the bank signalling a rate hike is “most likely” to be delivered. The size of the hike is less forecastable. Markets have fully priced a 25bps rate rise to 1.00% - and partially a 50bps rise – leaving markets at risk of a ‘dovish’ disappointment from a mere 25bps hike. While inflationary pressures, rates among trade partners and firm oil prices argue in favour of a more sizeable 50bps hike this month, the board are likely to stick to their predictable, steady, “gradual” 25bps due to a unique transmission mechanism and a firm preference for credibility-driven policy.
To counter any ‘dovish’ messages of a 25bps hike this week, the board will likely steepen their path projections further this quarter, introducing – for the first time this cycle – the likelihood of rate hikes at inter-policy report meetings. The bank could reinforce this message by stating that the next rate hike “will likely” follow in August.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.