Market is being overly hasty in pricing BOE rate cut - BNY Mellon
The market has run ahead of itself in pricing an interest rate cut by the Bank of England (BOE) and is yet to consider the possibility of the central bank keeping rates on hold until clear evidence of economic slowdown emerges, Bank of New York Mellon strategist Neil Mellor said in a note to clients, according to Bloomberg.
The market is perhaps being overly hasty in adorning its dovish hat.
It could be that the market has yet to embrace the very clear possibility that the MPC will postpone any decision on rates until it can be sure about the health of underlying demand.
A number of surveys show optimism has picked up following the December vote. This is the basis for talk of a ‘Boris bounce’ and surely prudence warrants one month’s patience in gauging its likely vitality.
As of Thursday, markets were pricing in a more than 60% probability of a BOE rate cut in January. The number stood at 44% on Tuesday.