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Analysts at Nomura think that with yesterday’s comments from BoE were deliberately aimed at moving market pricing from below to above a 50% chance of a hike in August.

Key Quotes

“On three counts BoE policy announcement was tilted to the hawkish side: i) the voting pattern, with chief economist Andy Haldane lending his voice to a hike, making it a 6-3 split, ii) the MPC’s clear optimism that the softness in the data in H1 was temporary and iii) the Bank’s revised guidance that it intends to reduce QE only when interest rates reach a lower threshold of 1.50% (rather than 2.00% previously).”

“The result is that the market now sees around a two-thirds probability of a 25bp hike on 2 August. There are much data to come between now and then – and the Bank has been clear that it is in data-dependent mode (“were the economy to develop broadly in line with the May Inflation Report projections, an ongoing tightening of monetary policy over the forecast period would be appropriate”).”