MUFG: BOE’s determination to sluggish tightening seemingly precedes a closing hike in September

Within the wake of the Financial institution of England’s newest
financial coverage determination, MUFG has shared its evaluation, suggesting that
whereas the tempo of tightening has been slowed, one other charge hike could
nonetheless be on the horizon.

Key Factors:

  1. Diminished Tightening Tempo: The BoE opted for a smaller
    increment of 25bps in its newest charge adjustment, indicating a
    deceleration in its tightening technique.

  2. Robust Majority for 25bps Hike: The choice to go
    for a 25bps improve was backed by a strong majority. This stance
    signifies that the bar has been set excessive for any future bigger hikes of

  3. Door Nonetheless Open: The BoE hasn’t completely shut the
    door on additional hikes. They’ve signaled that if there’s extra proof
    pointing in the direction of sustained inflation dangers, further charge hikes may
    be within the offing.

  4. MUFG’s Forecast: MUFG anticipates one final charge hike in September, primarily based on the present trajectory and statements from the BoE.

  5. Quick GBP Response: The choice for a smaller
    charge improve led to a sell-off in GBP. Nonetheless, the BoE’s comparatively
    hawkish tone, coupled with prior dovish market repricing, helped cushion
    the foreign money’s fall.


MUFG has weighed in on the BoE’s latest financial coverage adjustment,
deciphering the 25bps charge hike as a slowdown within the tightening
trajectory. Regardless of this measured transfer, the financial institution foresees one closing charge
improve in September. Whereas the quick aftermath noticed a dip within the
GBP’s worth, a number of elements have labored in tandem to mood its
descent. Buyers and merchants can be intently monitoring any cues from
the BoE within the lead-up to their subsequent assembly.

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