Not Much Reaction To SoMP

The space looks through the SoMP, with YM +2.5 & XM +4.0, just below pre-release levels after a downtick from best levels alongside the wider global core FI space. Bills are -2 to +2 through the reds, twist flattening.

• A reminder that the major economic forecasts were already pre-released in Tuesday’s post-meeting statement.
• The Bank looks for the unemployment rate to nudge lower through the remainder of the calendar year before edging back up in H123, hitting 4% at the end of ’24 (we knew the end point of the forecast, but not the short-term projections).
• The accompanying notes revealed that the Bank’s economic forecasts are “based on some technical assumptions. The path for the cash rate reflects expectations derived from surveys of professional economists and financial market pricing, with the cash rate assumed to increase to around 3 per cent by the end of 2022, and then decline a little by the end of 2024.”
• This is a little below market pricing of ~3.10% for the cash rate come the end of the Bank’s December meeting, although is pretty much in line with the median view of economists re: the same matter (if we look at the ‘Big 4’ in isolation). That means that there hasn’t been much in the way of STIR market reaction, with Dec OIS virtually unmoved.