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BoE Announcement – November 3 2022 – A Dovish Hike

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GBPUSD, H1

BoE hiked key rate by 75 bp 3.00% – as expected¹. At the same time the BoE said the peak interest rate is “likely to be lower” Markets, which should limit future tightening expectations, are better than those implied by them. It was the exact opposite of what last night’s FOMC statement. It is the largest increase in UK interest rates since 1992 when the Major/Lamont government were forced to respond to the debacle of Black Wednesday and the now famous dumping of the Pound from the ERM and the Soros “£1 billion” profit trade.

MPC voted 7-2. One member opted for 50 bp while the other voted for 25 bp. This likely reflects the prospect of an austerity budget by the new government. This will help to keep demand down and inflation pressures out. A dovish rise The new projections foretell a accordingly -1.5% The next year will be a contraction in activity. -1% 2024 A 2-year recession.  Assumed that the Bankrate will remain at Continue At 3%According to the assumption that inflation follows market expectations, it would fall below target for the fourth quarter 2025. Inflation, however, would still be just below the target. 1.4% To 2024 zero The end of 2025. This means that, in order to not undershoot the…



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