- Hard to avoid the conclusion that fiscal easing announced will prompt a significant and necessary monetary policy response in November
- Over the course of the past week, there has been a significant repricing of financial assets
- Yesterday's operation was not a monetary policy operation
- It was intended to prevent a painful and self-fulfilling market dynamic
- We will come to our more-complete assessment in November
- BOE operations are not intented to cap or control longer-term interest rates
The market is pricing in a 5% chance of 150 bps hike in November and that has softened from 38% yesterday. It's a quickly-shifting dyanamic that could be skewed by dislocations in markets.
