BoE on hold – pushing back market expectations

En bref

The BoE’s Monetary Policy Committee delivered a dovish surprise by keeping its monetary policy unchanged last Thursday.
Focal Point

Highlights:

  • The BoE’s Monetary Policy Committee (MPC) delivered a dovish surprise last Thursday. Contrary to strong market (and our weak) expectations, it kept Bank Rate constant at 0.1%. It also maintained its QE programme.
  • While the decision was a strong push-back to elevated market expectations, the bank kept the prospect of a key rate hike "over coming months" alive. We see a first rate hike in December (by 15 bps) but do not expect Bank Rate to exceed 0.75% by the end of 2022. Hence, despite correcting in recent days, we regard current market expectations of an increase to 1% by the end of 2022 as still exaggerated.
  • Short-dated UK gilts tumbled after the BoE decision and upward momentum is likely to remain low in the face of still exaggerated BoE expectations. By contrast, we see more leeway for the long end of the curve to shift upwards as the end of the BoE’s reinvestments will have a lasting effect on the bond supply/demand balance.

Download the full publication below

BoE on hold – pushing back market expectations
Picture

© Generali Investments, tous droits réservés. Ce site internet est publié par Generali Investments et est considéré comme une communication marketing et une promotion financière liée aux produits et services des sociétés du groupe Generali suivantes : Generali Investments Partners S.p.A. Società di gestione del risparmio, Generali Insurance Asset Management S.p.A. Società di gestione del risparmio, Generali Investments Luxembourg S.A. et Generali Investments Holding S.p.A. (ci-après dénommées ensemble Generali Investments). En outre, le site peut contenir des communications de marketing et de promotion financière de produits et services de sociétés faisant partie de la plate-forme Multi-Boutiques coordonnée par Generali Investments Partners S.p.A. Società di gestione del risparmio, et en particulier de Generali Global Infrastructure, Sycomore Asset Management, Aperture Investors LLC, Plenisfer Investments SGR, Lumyna Investments et Generali Real Estate S.p.A. Società di Gestione del Risparmio.