After the UK’s inflation rate fell in April to its lowest since August 2016, money markets raise bets on the Bank of England’s (BOE) interest rates turning negative from December, per BOE WATCH.
The implied policy rates are seen just below 0% by end-2020.
The odds for negative interest rates got ramped up after the Bank of England’s (BOE) Chief Andy Haldane said, “there are other options beyond that, or alongside that, that we’re looking at as well.”
Market reaction
The pound was offered into the softer UK inflation figures, with GBP/USD now losing 0.10% to trade at 1.2240. The spot hit a daily low of 1.2228 on the data release.
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