The Bank of England’s next monetary policy move is now wide open, following a significant downside surprise in the August inflation print out on Wednesday.
Prior to the August consumer price index reading of Wednesday, the market was pricing in an 80% chance that the central bank would hike interest rates by 25 basis points on Thursday to 5.5%.
Market pricing swung drastically after the annual headline CPI print fell to 6.7% in August from the 6.8% of July, defying a consensus forecast that it would rise to 7%.'s next monetary policy move is now wide open, following a significant downside surprise in the August inflation print out earlier on Wednesday., the market was pricing in an 80% chance that the central bank would hike interest rates by 25 basis points on Thursday to 5.5% — the highest level since December 2007.
Market pricing swung drastically after the annual headline CPI print fell to 6.7% in August from the 6.8% of July, defying a consensus forecast that it would rise to 7%.Shortly after 10 a.m. London time, the probability that the Bank will hold rates steady at 5.25% had risen from 20% to almost 55%, according to LSEG swaps data.
Notably, core CPI — which excludes volatile food, energy, alcohol and tobacco prices — came in at 6.2% in the 12 months to the end of August, down from 6.9% in July.
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