Global Rates & Economics: BoE on hold with a dovish pivot

Francis Diamond and Allan Monks discuss the upcoming February BoE meeting and views on UK rate markets. The BoE is widely expected to leave rates, but given the clear shift in inflation surprises and perceived risks since November, we believe the Bank will almost certainly make a dovish pivot that puts future easing higher up on the agenda than before. August is our current call, although its hard to argue too strongly against June. The BoE will not shut the door on a potential May cut, but we think it will also not want to encourage expectations for an easing that early. We keep a bullish duration view at the front end of the UK curve via longs in 1Yx1Y SONIA and money market curve flatteners.

This podcast was recorded on 26 January 2024.

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