BoE to pause at 1.50% in Q4 after hikes in June and August – Standard Chartered

The Bank of England (BoE) delivered a third consecutive 25bps hike. Economists at Standard Chartered now expect another 25bps hike in June. Furthermore, another hike in August is also expected – which should be the final rate hike of the year.

Bank Rate steady in Q4

“The BoE delivered a third consecutive 25bps hike (with three members opting for 50bps). Whereas previously we saw one further 25bps hike this year in August, we now envisage an additional 25bps hike in June, taking Bank Rate to 1.5% by year-end (1.25% previously).”

“We still view market pricing this year (four to five additional 25bps hikes by year-end) as too aggressive; so while additional tightening in Q4 cannot be ruled out, we think the BoE will pause at 1.50% to assess incoming data.”

“We still see Bank Rate topping out at 2.00% next year, and so reduce our expectation to two additional rate hikes in 2023 (from three previously), most likely in Q2 and Q3, but the timing of these additional hikes is highly uncertain at this stage.”