MNI PINCH Update: The market has dialled back....>

UK: MNI PINCH Update: The market has dialled back the probability of a bank rate

hike in 2019, although interpreting this shift is difficult in light of Brexit

complexity. MNI PINCH attributes a 59.2% probability of a 25bps hike at the

December meeting, down from 77.7% the previous week. We had previously argued

that the market could be expecting another BoE hike regardless of the Brexit

outcome: soft Brexit could result in the BoE returning to its previous

tightening path, while a no-deal scenario could force policy rate hikes to curb

higher inflation stemming from a weaker pound. We note that inflation breakevens

have been particularly volatile in recent months, which further clouds the

rationale behind the dovish shift in policy expectations.

* Please see http://marketnews-m.objects.xtenit.com/MNI_PINCH_Update.pdf