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View Change: JP Morgan: 50bp more likely in Sep, then more hikes from Aug23

BOE
  • “With gas prices having moved higher, there is a clear risk of further second round inflation effects, and the BoE’s surveys are signaling higher wage inflation. September looks like a close call between 25bp and 50bps, but we now think 50bp is more likely”
  • “While the continued inclusion of the word “forceful” is not a commitment, it suggests the bar for another 50bp hike in September is not particularly high. It is notable the BoE again made it clear that its internal surveys are suggesting that wage growth will continue to strengthen more than had previously looked likely, with firms having relative ease in passing on such costs.”
  • “We then expect the BoE to pause in November (previously 25bps) as it sees clearer evidence of weakening growth domestically and elsewhere in Europe, and some clearer signs of a weakening labor market. That would leave rates still at 2.25% by year end, but a little more front loaded”
  • Further 25bp hikes in August 2023 and November 2023 to 2.75%.
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  • “With gas prices having moved higher, there is a clear risk of further second round inflation effects, and the BoE’s surveys are signaling higher wage inflation. September looks like a close call between 25bp and 50bps, but we now think 50bp is more likely”
  • “While the continued inclusion of the word “forceful” is not a commitment, it suggests the bar for another 50bp hike in September is not particularly high. It is notable the BoE again made it clear that its internal surveys are suggesting that wage growth will continue to strengthen more than had previously looked likely, with firms having relative ease in passing on such costs.”
  • “We then expect the BoE to pause in November (previously 25bps) as it sees clearer evidence of weakening growth domestically and elsewhere in Europe, and some clearer signs of a weakening labor market. That would leave rates still at 2.25% by year end, but a little more front loaded”
  • Further 25bp hikes in August 2023 and November 2023 to 2.75%.