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MNI PINCH Update: A 25bps bank rate hike is......>

UK
UK: MNI PINCH Update: A 25bps bank rate hike is still odds on. PINCH attributes
a 74.6% probability of a December hike, up from 60.3% a week ago. As have argued
recently, the bewildering array of possible Brexit outcomes has made it
difficult for markets to price the trajectory of UK monetary policy, but on
balance expectations have settled on further BoE hikes to tame inflation. We
believe this reflects an assumption that a soft-Brexit scenario would favour a
resumption of BoE tightening (which is currently on pause) while a disorderly
no-deal scenario would trigger a severe sterling correction that would drive up
inflation further beyond target. This seems to be what inflation markets are
positioned for, with 5y5y and breakeven rates comfortably above 3%.  
Please see:  http://marketnews-m.objects.xtenit.com/MNI_PINCH_Update.pdf

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