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View change: Deutsche Bank looks for 75bp November hike

BOE
  • “We now expect the MPC to deliver a 75bps hike in November, though this is a very close call. We will review this ahead of the November meeting.”
  • “Crucially, the Bank's slightly altered forward guidance that any further "persistence in inflationary pressures, including from stronger demand" would warrant the MPC to respond forcefully. We see this as explicit guidance that the door for an even more forceful move in November.”
  • Four reasons for a “longer and potentially more front-loaded hiking cycle”: 1) “Fiscal policy has cleared the way for more and bigger hikes.” 2) “The labour market is tighter than before.” 3) "Inflation expectations remain at risk of destabilising further.” 4) “Inflationary pressures are looking sticker than before”
  • “We see the pace of hikes slowing back to 50bps in December, as recession risks mount and global growth slows dramatically. Thereafter, we see two further 25bps hikes in Q1-2023 (Feb and March), taking the Bank Rate to 4% [in line with previous terminal rate], one meeting earlier than we previously expected. We continue to pencil in quarterly rate cuts starting from Feb-24 until the Bank Rate reaches 1.75% (the top end of our neutral rate estimate).”
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  • “We now expect the MPC to deliver a 75bps hike in November, though this is a very close call. We will review this ahead of the November meeting.”
  • “Crucially, the Bank's slightly altered forward guidance that any further "persistence in inflationary pressures, including from stronger demand" would warrant the MPC to respond forcefully. We see this as explicit guidance that the door for an even more forceful move in November.”
  • Four reasons for a “longer and potentially more front-loaded hiking cycle”: 1) “Fiscal policy has cleared the way for more and bigger hikes.” 2) “The labour market is tighter than before.” 3) "Inflation expectations remain at risk of destabilising further.” 4) “Inflationary pressures are looking sticker than before”
  • “We see the pace of hikes slowing back to 50bps in December, as recession risks mount and global growth slows dramatically. Thereafter, we see two further 25bps hikes in Q1-2023 (Feb and March), taking the Bank Rate to 4% [in line with previous terminal rate], one meeting earlier than we previously expected. We continue to pencil in quarterly rate cuts starting from Feb-24 until the Bank Rate reaches 1.75% (the top end of our neutral rate estimate).”