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More priced for the UK than the ECB or the Fed

SONIA
  • The implied rate for the September MPC meeting continue to move to new highs with 69bp now priced in - this is more than the 67bp priced for this week's ECB meeting and also more than the 64bp priced in for the FOMC meeting in a fortnight. Also by year-end markets now price 193bp of hikes for the BOE, against 175bp for the ECB and 135bp for the Fed. There is no part of the curve over the next 12 months where markets expect less from the BOE than either of these peers.
  • This is despite a lack of communication since the last MPC meeting - the only public comments we have had outside of the day and the following day of the August meeting has been an exclusive MNI interview with Jonathan Haskel which is available here.
  • This afternoon, we will hear from Catherine Mann who is giving a speech entitled "Inflation Persistence and Monetary Policy Strategy" at the University of Kent at 16:30BST. She has generally been seen as favouring going hard and fast to stop second round inflation effects becoming embedded with the potential for a reversal in rates next year. Any comments on her preferences for 75bp vs 50bp, the terminal rate and the outlook for next year will be closely followed and has the potential to move SONIA.
  • This comes ahead of Wednesday's testimony ahead of the Treasury Select Committee of Bailey, Pill, Mann and Tenreyro (with the annual reports of Mann and Tenreyro due to be released too). This will be the last scheduled appearance of MPC members ahead of next week's meeting and monetary policy decision.
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