Highlights:

• The Bank of England (BoE) is more likely than not to hike its Bank Rate tomorrow by 15 bps to 0.25%. Otherwise, we see the hike on December 14. We expect a second hike by 25 bps in February and a third one to 0.75% late next year.
• This path is considerably more cautious than markets currently price in with a Bank Rate at 1.25% before the end of 2022. Accordingly, we see a (at least implied) push-back to market rates which could come from the MPC’s forward guidance, voting results or inflation outlook.
• If the BoE softens market expectations tomorrow as expected, the rise in short-dated yields will also be dampened – but we do not forecast a lasting impact on the long end.
• We will discuss the outlook in more depth in a Focal Point to be published over the next days.

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