• Prior 3.75%
• Bank rate vote 0-8-1 vs 0-8-1 expected (Pill voted to raise bank rate by 25 bps)
• Reasonable to hold bank rate at 3.75% given UK economic situation and Middle East uncertainty
• CPI likely to be higher this year as effect of higher energy prices passes through
• Our job is to make sure inflation gets back to 2% after initial impact of the war has passed
• There is a risk of material second-round effects from inflation
• Policy setting would need to lean against this
• Weaker economy, labour market, and tighter financial conditions will help reduce inflation over time
• Statement details to follow..

Coming into the meeting, traders were pricing in ~70% odds for a rate hike in June with the first full 25 bps rate hike priced for July. As for the year, traders were pricing in ~70 bps of rate hikes by the time we get to the final December meeting.

More to come..

This article was written by Justin Low at investinglive.com.



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