Antonio Del Favero
Summary We expect the MPC to leave the Bank Rate at 3.75% on June 18. Forward guidance is unlikely to be altered, but, given the dovish data, the tone in the minutes could become more balanced. We expect a 7-2 vote split, but we see the risk that just Huw Pill could vote for a […]
Antonio Del Favero
Summary Oil and SoH drive rates, not central banks: Short-end rates (EUR, GBP, AUD, NZD) are currently tightly linked to oil prices, which depend on the Strait of Hormuz (SOH) situation. Oil up, short-end rates up, and vice versa. There is an oil price level where the short end can disconnect from the oil price, […]
Antonio Del Favero
Summary The MPC will hold at 3.75%, most likely 7-2, with Pill and Greene dissenting. The split between 7-2 and 8-1 or 9-0 remains an extremely close call. Honestly, if Mann were to join (7-3), we would not be too surprised. However, we do not expect this to happen. Post-March data tells two conflicting stories: […]
Antonio Del Favero
Summary Hold in April, hike in June — the modal path. My preference is back-to-back June/July moves, but it is too early to be sure. Stagflationary risks: growth softer than expected, inflation at the top of the baseline range and set to push higher in May as core rebounds. ECB 1Y and 3Y CPI expectations […]
Antonio Del Favero
Summary The BoE kept rates on hold while providing four hawkish messages: the vote split 9-0, they are ready to act in April, there is a lower bar for rate hikes, and CPI could be up to 3.5% in Q3. However, there is a clear mitigating factor: ‘policy would need to be less restrictive if […]
Antonio Del Favero
Summary We expect the BoE to hold the Bank Rate unchanged at 3.75% with a 7-2 split (Taylor and Dhingra dissenting). We think the minutes are likely to highlight inflation risks from energy, with uncertainty and two-sided risks. The message will be that policy remains data-dependent, with no strong guidance, but easing still possible if […]
Antonio Del Favero
Summary Bank of England (BoE) BoE to leave rates unchanged at 3.75%. It is a very close call, but we think a 6-3 vote is slightly more likely than 7-2. We expect the guidance in the statement to remain largely unchanged. We see some dovish risks in this meeting, but we think the BoE will […]
Antonio Del Favero
Key Points We posted this preview ahead of the BoE meeting in the Bloomberg chat. The meeting went broadly as we expected. 1. BoE to leave rates at 4% with a hawkish 7-2 split (i.e., 8-1 is more likely than 7-1-1 or 7-3). Taylor will vote for a cut. Dhingra is the wildcard. The rest […]
Henry Occleston
Summary UK headline inflation ticked back up in headline and core and remained stable in services. This was a broad beat versus consensus and slightly above MPR expectations. Beats in food appear to be beef and dairy related. But we would not write this off as transitory given sector inflation has been rising consistently YoY […]
Henry Occleston
Summary The MPC voted for no change in bank rate (4.25%), as expected. Minimal statement changes included adding a clearer indication of ‘slack opening up’ in the UK economy. We still expect the BoE to cut again in August and cut to 3.5% this year. Market Implications We remain long SFIZ6 in our model portfolio, […]
Henry Occleston
Summary With no presser and no update to forecasts, the BoE’s policy announcement is unlikely to be eventful. While cracks continue growing in the UK economy, data has not derailed sufficiently enough for the BoE to change tack. We expect inflation to roughly align with May’s MPR: headline below consensus but core higher. We analyse […]
Henry Occleston
Summary The BoE cut 25bp as expected. Pill’s backing for a pause was an unexpectedly hawkish surprise. So too was Bailey’s comment that the decision among centrists was a coinflip until the tariff announcement. We retain our central case that they skip cutting in June but will have the evidence needed to accelerate cuts from […]
Henry Occleston
Summary We expect the MPC to cut 25bp this week, with Dhingra and possibly Taylor backing a larger cut. Forecasts are likely to be more dovish on tariffs, low energy costs and undershooting wage growth. This and broader tariff uncertainty will add to a dovish tone in the statement – but we do not expect […]
Henry Occleston
Summary The BoE’s March meeting aligned with our expectation, albeit with less dovish voting. We read little into this. The bar is high for data to prevent quarterly cuts. However, by August, we expect fiscal tightening, labour market loosening and soft core services inflation will push the BoE to accelerate cuts. February inflation will struggle […]
Henry Occleston
Summary We expect the BoE to leave the bank rate unchanged at 4.5%, with Dhingra, Taylor and Mann voting for another cut. We would be unsurprised if Mann backed another 50bp cut: our BoE LLM sentiment index supports her fear that transmission to financial conditions has weakened. The minutes will indicate whether this view has […]
Henry Occleston
Summary The BoE cut 25bp, as expected. MPR forecasts were bearish, and comments still indicate more cuts ahead. I read little into the two 50bp votes. Upward revisions to MPR near-term inflation forecasts exceeded our expectations, with smaller impact from one-offs than we anticipate. Despite labour market loosening, medium-term inflation is below target but still […]
Henry Occleston
Summary We expect the BoE will cut rates by 25bp this week, with an 8:1 vote split. The updated MPR projections will likely be much more bearish on the labour market and GDP, despite strong wage growth. Along with updated supply-side analysis, this should see inflation undershooting target by even more in the medium term […]
Bilal Hafeez
Speech given to members of a leading UK political party in London on 5 December 2024. The UK’s Fundamental Problem: Productivity Rather than talking about the recent UK budget or other such announcements, I would rather discuss the broader context of what hampers the UK economy. From there, we can then understand which are the […]
Henry Occleston
Summary The BoE cut 25bp last week as expected. The MPR forecasts and tone of comments were largely in line with our base-case expectation. Inflation was revised down near-term, but revised up in the long-term too, albeit with the positive skew removed as per our base-case. Headline and core CPI profiles to year-end seem reasonable, […]
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