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BoE: A 25 bps next week not fully priced in interest rate markets – Rabobank
Next Thursday, the Bank of England (BoE) will announce its decision on monetary policy. A 25 basis point rate hike to 4.25% is expected. Analysts at Rabobank also see a quarter-point rate increase and warn that such scenario is not fully priced in the interest market, “which indicate that the chance of a hold has increased following the collapse of SVB.”
Fear, uncertainty and doubt
“The 2007-2008 financial crisis taught us that even small failures can lead to significant problems. While SVB's poor liquidity risk management was the underlying cause of its downfall, the shift from a 'lower for longer' to a 'higher, possibly for longer' interest rate regime acted as the trigger. This raises the question of whether other financial institutions could eventually face a similar situation, fuelling the infamous trio of fear, uncertainty and doubt.”
“We would therefore expect the hiking cycle to continue at a more moderate pace of 25bp at next week’s meeting. That would lift Bank rate to 4.25%. With external members Tenreyro and Dhingra surely not voting for an increase, five out of seven remaining policy makers would have to vote for such a hike. Indeed, it wouldn’t even come as a surprise if we’d see a three-waysplit, with Tenreyro and/or Dhingra even voting for a cut.”
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Material posted here is solely for information purposes and reliance on this may lead to losses. Past performances are not a reliable indicator of future results. Please read our full disclaimer.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75.19% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
