Is it possible that the Bank of England (BoE) might speed things up and hike its key rate by 50bp? Economists at Commerzbank expect the “Old Lady” to adopt a cautious stance, weighing on the pound.
BoE might dampen the rate hike expectations for the next meetings
“The BoE is concerned about the effects the high inflation rates might have on consumer behaviour. At its last meeting, the vote in favour of a rate hike was not unanimous. One member voted in favour of keeping rates on hold. If one believes their recent comments, a 50bp rate hike today seems not terribly likely.”
“The market is expecting a further 25bp for each of the rate meetings over the course of the year. Our economists expect the BoE to take a break every so often too. If this emerges after today's meeting rate hike expectations on the markets might get corrected slightly to the downside, which would put pressure on sterling.”
See – BoE Preview: Forecasts from 11 major banks, another dovish hike on the cards