In terms of market pricing, the first full 25 bps rate cut is currently baked in for August. But the odds of a June move are at ~54% currently. And for the year as a whole, traders are pricing in ~56 bps worth of rate cuts at the moment. So, what are the major banks saying after the BOE last week? (h/t @ MNI Market News)
Barclays
– First rate cut still primed for June, that is if the data lines up with the BOE’s forecasts. Subsequently, look for further cuts in August, September and November.
HSBC
– First rate cut in June but the bank rate vote will be mixed, either 5-4 or 6-3. Then, BOE to engage with quarterly cuts after to 4.50% by end of the year and 3.50% by end of 2025.
Deutsche
– Can expect first rate cut in June as the bar for any hawkish surprises is very high. Then, further cuts to follow in September and December.
JP Morgan
– Change in guidance lowers the bar for a June rate cut, that is if data falls in line with the BOE’s forecasts. Base case is still for a rate cut in August for now though.
ING
– June will be a “close call” but first rate cut still expected in August. The April CPI print will be the decider.
BNP Paribas
– First rate cut in June with 75 bps of cuts in 2024. A further 100 bps of cuts to follow in 2025, bringing the bank rate to 3.50%.
Wells Fargo
– June rate cut a possibility but not probably. First rate cut still expected in August before sequential cuts from November through to May next year.
It’s quite a mixed bag of calls with a slight leaning towards June I would say. But at the end of the day, it will come down to the next two UK CPI reports. The April reading will be released on 22 May and that is arguably the most important one to look forward to. That is because the second one (May reading) will only be released on 19 June, which is just one day before the next BOE policy decision.