In today’s briefing:
- BoE: Hikes Reaching Exhaustion Early
- A Pivot From Hawkish To…More Hawkish
BoE: Hikes Reaching Exhaustion Early
- The BoE hiked by 75bps in Nov-22, as expected. A substantial drift below the inflation target means the Bank’s forecasts imply already tight policy priced to go too far.
- Guidance is also explicit about market pricing peaking too high. Two MPC members dissented in favour of a smaller rise, and at least one may not support further hikes.
- We maintain our view that the market is over-pricing the cycle. BoE guidance reinforces that, although we still believe it best to focus on the data rather than MPC words.
A Pivot From Hawkish To…More Hawkish
- We finally got a pivot – but it wasn’t the one many investors were hoping for.
- At the FOMC press conference, Powell pivoted from hawkish to…more hakwish.
- Through the use of 3 unambiguous punchlines, Chairman Powell made sure to convey one clear message: we will get it done, whatever it takes.
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