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VIEW CHANGE: Barclays: 50bp in August with 5.75% terminal rate

  • “We think the burden of proof has now shifted such that the data would need to show notable easing in the labour market and deceleration in inflation in order to slow the pace of hiking.”
  • “The MPC stated in these minutes that it now expects services inflation to be 'broadly unchanged in the near term' (from 7.4% y/y currently), ie, well above expectations in the May MPR. However, we think it will require at least two sets of relatively unchanged prints to bring enough reassurance to revert back to 25bp.”
  • “We now expect another 50bp hike in August and a final 25bp hike in September for a terminal rate of 5.75% (prev. 5.5%).”
  • “We continue to see four 25bp cuts in H2 24, leaving Bank Rate at 4.75% at the end of 2024.”

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