BoE hiked rates amidst a cautious note – UOB

Economist at UOB Group Lee Sue Ann assesses the lates BoE monetary policy meeting.

Key Takeaways

“The Bank of England (BOE)’s Monetary Policy Committee (MPC), at its meeting in May, voted by a majority of 6-3 to increase the Bank Rate by 25bps to 1.00%. This is the fourth consecutive policy meeting since Dec that the BOE has raised its key interest rate. There are, however, signs that members are increasingly more divided.”

“Previously, we had held a cautious view of the BOE pausing once the policy rate reaches 1.00%. However, the latest voting outcome by the MPC has turned out a little less dovish than our expectations, and we thus now look for another 25bps hike in Jun.”

“As for asset sales, given that Bank staff were asked to work on a plan to sell gilts and present it at the Aug meeting, we will likely have to wait until at least then for some guidance, though we expect sales to begin in 4Q22 at GBP5bn a month.”