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Slightly Shallower BoE Cuts Priced Today, Fiscal Speculation Dominates

STIR

The pull away from best levels in the long end leaves BoE-dated OIS to stabilise around pricing 60bp of cuts for ’24.

  • The first 25bp cut is ~90% priced come the end of the Bank’s June ’24 MPC vs. fully priced earlier today.
  • '24 BoE contracts are little changed to ~5bp firmer on the session., sticking to familiar ranges.
  • Fiscal discussions dominate local news flow.
  • Looser fiscal policy would promote higher for longer Bank of England interest rate settings, although weekend speculation has only moved the pre-Budget fiscal easing base case back to where it was in early to mid-February, as opposed to introducing any new ideas.
BoE MeetingSONIA BoE-Dated OIS (%)Difference Vs. Current Effective SONIA Rate (bp)
Mar-245.203+1.5
May-245.167-2.2
Jun-245.094-9.5
Aug-244.961-22.8
Sep-244.847-34.2
Nov-244.698-49.1
Dec-244.588-60.1
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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