For the first time since August, the 25 basis point rate cut from the BOE is priced at 100 percent in the markets. Interest rate increases are expected to continue in the short term and interest rates are expected to peak at 4.5 percent until the summer months.
This claim came after the information that the inflation slowed down in the country and the economic growth stalled. The UK policy rate is currently 3.5%, the highest in more than 10 years.
Jefferies Strategist Mohit Kumar stated that they are more positive for the European economy, while they still have a negative view on the UK.
Economists state that the BOE will be slower to cut interest rates compared to peers, while others disagree due to sticky inflation.
Societe Generale Strategist Kenneth Broux stated that inflation is on the downward path and said, “If there is a recession possibility, there is no reason why the bank should not start reducing interest rates until the end of the year.” In the markets, it is almost certain that the bank will increase the interest rate by 50 basis points in the next meeting.
Daniela Russell, HSBC Holdings Rate Strategist, said that if officials assume that a rate cut will be needed after a few months, it can continue the week with a 25 basis point increase. The expert said, “If they continue with 50 basis points, they may pause afterwards.”
