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View Change: Barclays looks for 50bp hikes in November and December to 3.25%

BOE
  • “We think the quorum for 50bp hikes has strengthened and we lift our rate forecasts from 1x25bp to 2x50bp by the end of the year.” This would be a rate of 3.25%.
  • Ahead of the September MPC meeting, we judged Barclays to have been the most dovish of the analyst outlooks that we had read but they now see the terminal rate just below the median analyst expectation of 3.50%.
  • Barclays notes that they “acknowledge the risk of further hikes in 2023. However, if the Bank were to hike further next year, we believe the pace of tightening would be no more than 25bp per quarter, ie, radically slower than currently.”
  • “We note a shift of focus in the minutes away from short-term consideration related to excessively high and increasing headline inflation, towards assessing underlying medium-term inflation pressures… Indeed, the slight modification to the guidance suggests more of a focus on the outlook than short-term runaway inflation.”
  • “The government intervention on energy prices creates the conditions for a more gradual adjustment of the monetary policy stance: it removes the need to overreact in the short term, and with it the need to ease policy in the medium term. We also believe, that medium-term inflationary pressures on the back of the fiscal package are overblown.”
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  • “We think the quorum for 50bp hikes has strengthened and we lift our rate forecasts from 1x25bp to 2x50bp by the end of the year.” This would be a rate of 3.25%.
  • Ahead of the September MPC meeting, we judged Barclays to have been the most dovish of the analyst outlooks that we had read but they now see the terminal rate just below the median analyst expectation of 3.50%.
  • Barclays notes that they “acknowledge the risk of further hikes in 2023. However, if the Bank were to hike further next year, we believe the pace of tightening would be no more than 25bp per quarter, ie, radically slower than currently.”
  • “We note a shift of focus in the minutes away from short-term consideration related to excessively high and increasing headline inflation, towards assessing underlying medium-term inflation pressures… Indeed, the slight modification to the guidance suggests more of a focus on the outlook than short-term runaway inflation.”
  • “The government intervention on energy prices creates the conditions for a more gradual adjustment of the monetary policy stance: it removes the need to overreact in the short term, and with it the need to ease policy in the medium term. We also believe, that medium-term inflationary pressures on the back of the fiscal package are overblown.”