BoE to raise rates by 50 bps in December

On Thursday, the Bank of England raised interest rates by 75 basis points to 3%. Analysts at Rabobank expect a 50 bps rise in December and a 4.75% terminal rate.

Key Quotes:

“There has been a global debate about the current pace of interest rate hikes, the peak at which central banks decide that enough has been done, and the pivot that at some point will follow. Yesterday, the Fed signalled it is looking for a slower pace, to a higher peak, for a longer period of time. The Bank of England is instead signalling it is accelerating the pace, to a lower peak, for a shorter period of time. We don’t fully buy into this and expect the central bank to raise rates by 50 bps in December and eventually to 4.75% next year. This further amplifies the recession, but the UK’s inflation situation increasingly looks like a mix of the US’s and the eurozone’s.”

“A recession may be required to quell inflation. The market isn’t buying it either: investors are still pricing in a peak of 4.7%, but ‘inflation insouciance’ on the part of the central bank put pressure the backend of the gilt curve and accelerated the slump in sterling, to just below 1.12.”

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.