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STIR: BoE Cut Seen By Almost All, '25 Market Path Much Shallower Since Budget

STIR
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BoE-dated OIS shows 23bp of cuts for today’s BoE decision, 32bp through year-end, 59bp through March, 78bp through June and 88bp through Dec ’25..

  • The impact of the Budget and feedthrough from Trump’s victory in the U.S. election has removed ~30bp of cuts through the end of ’25 (based on closing levels seen on October 29).
  • SONIA futures flat to +5.0 after many contracts registered fresh cycle lows yesterday.
  • We, along with the vast majority of analysts, would be very surprised to see anything other than a 25bp cut at today’s MPC decision.
  • Inflation no longer consistently overshooting targets and continued moderation in wage growth argue in favour of a further removal of restriction.
  • However, we think there is a good chance of higher-than-expected inflation forecast.
  • We are concerned that the extra cost of lower paid workers' wage increases plus employer NI increases will be passed through to services inflation.
  • Budget-generated uncertainty may increase caution surrounding cuts.
  • Click for our full preview.

BoE Meeting

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BoE-dated OIS shows 23bp of cuts for today’s BoE decision, 32bp through year-end, 59bp through March, 78bp through June and 88bp through Dec ’25..

  • The impact of the Budget and feedthrough from Trump’s victory in the U.S. election has removed ~30bp of cuts through the end of ’25 (based on closing levels seen on October 29).
  • SONIA futures flat to +5.0 after many contracts registered fresh cycle lows yesterday.
  • We, along with the vast majority of analysts, would be very surprised to see anything other than a 25bp cut at today’s MPC decision.
  • Inflation no longer consistently overshooting targets and continued moderation in wage growth argue in favour of a further removal of restriction.
  • However, we think there is a good chance of higher-than-expected inflation forecast.
  • We are concerned that the extra cost of lower paid workers' wage increases plus employer NI increases will be passed through to services inflation.
  • Budget-generated uncertainty may increase caution surrounding cuts.
  • Click for our full preview.

BoE Meeting

Keep reading...Show less