Scotia comments:
- expected to result in another 0.25% Bank Rate hike to 0.75%.
- We may see some more hawkish dissent in favour of a larger move.
- Guidance will be key as upward pressure upon inflation that is already exceeding targets will be weighed against uncertainty stemming from the impact of the war in Ukraine. That might be enough to tamp down reference to “some modest further tightening” being required given the BoE’s closer proximity to the war’s effects, but the BoE’s higher rate of core inflation (4.4% y/y) than the ECB’s, its continued rise, and the likelihood of further upward pressure have me thinking they’ll deliver a hawkish surprise to markets.
TD:
- We expect the MPC to hike Bank Rate by 25bps and signal further tightening, but with a cautious tone. We expect a single further hike this year, in May. A shifting UK macro mix of growth and inflation leaves GBP vulnerable, especially given the extent of BoE hikes priced into the curve.