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Ramsden looking for more hikes - but there is little to change our view

BOE
  • Ramsden's comments in a recently published Bloomberg interview probably aren't too surprising. Recall that he was one of the four MPC members who had voted for a 50bp hike in February. He said that "we’re not there yet in terms of how far monetary policy has to tighten... I‘m still very, very supportive of the forward guidance that there may well need to be further tightening in the coming months.”
  • He also said that “I don’t think we’ve gone far enough yet on bank rate, but I do think that what we’ve already done is having an impact.” and that “Given what we know about the UK labor market, I wouldn’t be surprised if it turned out to be a bit tighter... I think there are upside risks on inflation the medium term.”
  • We had written in the MNI BOE Review that we think there will be a 25bp hike in June and probably another in August, but that further hikes will be more questionable as the growth outlook sours (albeit we wouldn't rule out more). Ramsden's comments today don't change our view and we still think that market pricing of 107bp more hikes in 2022 looks excessive (but not out of the realms of possibility).
  • The Dec-22 SONIA futures contract opened 6 ticks higher and has since reversed 4 ticks to be 2 ticks up on the day.
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