Industry anticipates BoE to slow rate hikes and adopt cautious approach

‘Fiscal-monetary nexus’

Investment professionals expect the Bank of England to take a slower and more cautious approach to rate setting at next week’s meeting (3 November) and going forward.

However, they warn that investor reaction to the approach is unclear and plans may shift after the government's fiscal plan is revealed later in November.  The market is pricing a 75 basis point hike from the Bank of England at the November meeting, down from 105 basis points that was at one point priced due to the turmoil of the Mini Budget. "The government's climb down from the inflationary policies of Trussonomics means the Bank will not have to slam down on the brakes quite as hard," commented Laith Khalaf, head of investment analysis at AJ Bell. However, with the change to the...