Market analysts and traders are closely monitoring the possibility of a rate cut by the Bank of England in August. Recent data shows varying probabilities, with some indicating a 36% chance of a cut in August and a 70% likelihood of easing in September. Despite overall CPI reaching 2%, services inflation remains high at 5.7%, leading to adjustments in market expectations. Traders are now forecasting a reduction of 39 basis points in 2024.
Note of caution re today’s inflation figs. While overall CPI rate is back to 2%, services inflation is still 5.7%: ABOVE economists (5.5%) and BoE (5.3%) forecasts. Upshot is actually markets have slightly REDUCED the prob of an Aug cut. Look: the implied rate for Aug just ROSE👇 https://t.co/1pWYUqksch
Traders are adjusting their expectations for a Bank of England rate cut following the release of UK CPI data. They are now forecasting a reduction of 39 basis points in 2024.
GBP OIS reprices marginally in a hawkish direction since the CPI print - now seeing a 36% chance of an Aug cut (vs 52% yday), 1st cut still fully priced for Nov, pricing 42.3bp of easing by year-end (vs. 46.3bp yday)
September rate cut back on the table? Still a lot of data to come over the summer. But FWIW, fed funds futures now pricing in nearly 70% probability of September easing. Up from around 61% odds as of yesterday. https://t.co/Tc460KuDJF
Implications for Bank of England - A rate cut in Aug is still a possibility https://t.co/TjwuhzQVyc
#implications for @BankofEngland --- A rate cut in Aug is still a possibility, chart @GoldmanSachs https://t.co/VgTOdFIuol