BoE: A rate hike in November and more to come in 2022 – Wells Fargo
20.10.2021, 16:25

BoE: A rate hike in November and more to come in 2022 – Wells Fargo

Analysts at Wells Fargo expect the Bank of England to raise its policy rate by 15 bps at its November announcement. They expected more rate hikes during 2022 but below what is priced into interest rate markets, so they explain the pound could face some mild downside risks.

Key Quotes: 

“Growth and inflation trends don't offer an open-and-shut case for an imminent rate hike. However, in the context of increasingly hawkish comments from Bank of England (BoE) policymakers, we think today's CPI will be enough for a November interest rate lift-off, and a gradual pace of rate hikes thereafter.”

“Looking beyond November we expect a relatively gradual pace of rate increases. We believe economic growth could remain somewhat choppy which could limit the speed at which policymakers move, while CPI inflation should also ease back gradually as 2022 progress. Following the initial November hike, we expect another 25 bps increase in May 2022 and a further 25 bps in November 2022, meaning we see the Bank of England's policy rate ending next year at 0.75%—a bit less than currently priced into interest rate markets. As a result, the pound could face some downside for now, and there may also be some mild downside risk to our forecast of GBP/USD appreciation over the medium-term.”

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