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VIEW CHANGE: MS looks for 25bp hikes in June and August, risk of September

BOE
  • "While we think next week's inflation print will be softer and, more broadly, we see inflation releases ahead of the August meeting as more in line with the BoE's expectations from May, the April beat and today's LFS beat imply more hikes will be needed. We had already anticipated a 25bp move in June, and we add another 25bp hike in August, given that the MPR will feature an uplift to the wage growth forecast."
  • "We still think the BoE underestimated 2Q pay pressures in the May MPR –we now see 2Q23 private sector regular pay growth averaging at 7.1%, 80bp higher than the BoE."
  • "The risks are more skewed towards another move – in September – rather than a 50bp hike."

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