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View Change: Daiwa: Look for 50bp in Aug then 25bp hikes to 2.50% this year

BOE
  • “The MPC appeared more concerned than before about the risks that domestically generated inflation might become entrenched. Indeed, it hinted that hikes of a larger magnitude could gain majority support in future.”
  • “In light of the new guidance, we also now expect a 50bps hike in August. However, we think Bank Rate is more likely to end the year closer to 2.5%, although much will depend on the BoE's updated forecasts due in August.”
  • After the 50bp August hike, Daiwa looks for 25bp hikes in the remaining meetings this year to 2.50% before looking for a cut in each of Q1-24 and Q2-24.
  • Daiwa also think there is a good chance gilt sales commence in September, but that is dependent upon market stability.
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