There is still a debate about what to expect from the BOE in their 3 November policy decision, whether we will see a 75 bps or 100 bps rate hike. Before the fiscal U-turn, markets were anticipating that the central bank would have to go big to match up to the government’s policy path but that has since changed dramatically since the end of last week.
The terminal rate outlook for the BOE was seen at around 6% then but that has since been toned down to 5.25% now and that says a lot about how market players are feeling over the recent changes.
Bailey hinted that the central bank may have to be more aggressive in two weeks’ time, so we’ll see what exactly they will bring to the table then. But for now at least, markets are expecting a return to the same path – more or less – before the whole Truss-Kwarteng fiasco that kicked off at the end of September.
