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VIEW CHANGE: TDS pushes first cut back to June with higher terminal rate

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  • TD Securities has pushed back its expectation of the first cut from May to June (now all three of the analysts that we track that were looking for May cuts - Deutsche Bank, MS and TDS all look for a first cut in June instead).
  • TDS notes that "Despite the bumps in recent data, the MPC has effectively boxed itself into a corner, and doesn't appear to be reaching for the "undo" button. It was notable that Governor Bailey's remarks at this week's IMF meetings didn't repeat the possibility of a cut before inflation hits 2%, but instead reinforced that the BoE can cut "before the FOMC", which we and markets now expect in September"
  • TDS notes that "With little out ahead of its August meeting, we expect the MPC to stay on the sidelines, but to resume cuts in September" with sequential cuts for the remainder of 2024 to 4.25% by year-end (3.75% previously).
  • TDS then looks for quarterly cuts through 2025 to 3.25% before a further 25bp cut in 2026 to a terminal 3.00%.
  • Previously TDS had looked for 25bp cuts in May and August then sequential 25bp cuts from November to a terminal 2.50%.
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  • TD Securities has pushed back its expectation of the first cut from May to June (now all three of the analysts that we track that were looking for May cuts - Deutsche Bank, MS and TDS all look for a first cut in June instead).
  • TDS notes that "Despite the bumps in recent data, the MPC has effectively boxed itself into a corner, and doesn't appear to be reaching for the "undo" button. It was notable that Governor Bailey's remarks at this week's IMF meetings didn't repeat the possibility of a cut before inflation hits 2%, but instead reinforced that the BoE can cut "before the FOMC", which we and markets now expect in September"
  • TDS notes that "With little out ahead of its August meeting, we expect the MPC to stay on the sidelines, but to resume cuts in September" with sequential cuts for the remainder of 2024 to 4.25% by year-end (3.75% previously).
  • TDS then looks for quarterly cuts through 2025 to 3.25% before a further 25bp cut in 2026 to a terminal 3.00%.
  • Previously TDS had looked for 25bp cuts in May and August then sequential 25bp cuts from November to a terminal 2.50%.