On August 7, investment banks including MUFG and other investment banks gave their views on the future monetary policy of the British pound and the Bank of England, as follows:
①Mitsubishi UFJ: The British economy is expected to fall into recession in the fourth quarter, encouraging the Bank of England to cut interest rates, and the pound is expected to fall below 1.2000
"The Bank of England is still expected to raise rates to a high of just under 3.00% early next year and then start cutting rates after inflation peaks," said Lee Hardman, currency analyst at MUFG.
"The Bank of England is still expected to raise rates to a high of just under 3.00% early next year before starting to cut rates after inflation peaks."
"The Bank of England forecasts that the UK economy will enter a recession from the fourth quarter of this year, and the recession is expected to last for five quarters, with GDP contracting by about 2 percentage points, which has encouraged market expectations for rate cuts from next year and beyond."
"Overall, the developments have not changed our bearish outlook for GBP and we still expect GBP to fall back below 1.2000."
②Standard Chartered Bank: The Bank of England may exacerbate downside risks to the economy
Standard Chartered economist Christopher Graham said: "Members of the MPC are calculating that current inflationary pressures - albeit mainly from higher imported commodity prices - raise the risk of secondary effects on wage and price expectations, particularly Given the continued tightness in the labor market."
“The monetary policy report noted that trend labor supply was judged to be slightly weaker than previously expected. On its own, this outlook justifies an accelerated pace of monetary tightening.”
“However, with a severe recession looming, the BoE could exacerbate downside risks to the economy and could lead to inflation significantly below target in the medium term (in the Monetary Policy Report, CPI inflation is expected to fall to 2025 in the third quarter of 2025) 0.8%).”
③Oxford Economics: The policy rate will rise to 2.5% in November
Andrew Goodwin, chief UK economist at Oxford Economics, said: “By accelerating the pace of rate hikes at its August meeting, the MPC is more explicitly setting policy based on risk conditions rather than aligning with its core forecasts. This suggests that bank rates The peak was higher than we expected. We now see the policy rate rising to 2.5% in November, with upside risks.”
“The latest forecasts from the Monetary Policy Committee point to a recession in the UK, which will create a lot of spare capacity. Even forecasts assuming constant policy rates suggest inflation will end up well below the 2% target. This suggests that by 2023, A rate cut may be needed in 2020, by which time the wage-price spiral should have clearly not formed."
④ United Overseas Bank: Do not rule out the possibility of raising interest rates by 50 basis points in September
UOB economist Lee Sue Ann said: “As the cost of living crisis worsens, we see only room for a further 50bps hike in bank rates to 2.25% before pausing. Although we don’t rule out September 15 The possibility of another 50bps rate hike at its next meeting, but we think economic data will be soft enough for the MPC to resume raising rates by 25bps."
“A key caveat about the BoE forecast is that the next prime minister is likely to support households throughout the winter. Whether massive fiscal stimulus will be enough to reduce the hit to GDP remains to be seen. In any case, the BoE’s view on the future of a The series results keep the doors open, equipping itself with complete flexibility."
⑤ UBS Global Wealth Management: GBP/USD may be suppressed in the next few months
Thomas Flury, a strategist at UBS Global Wealth Management, said: “We don’t think a 50bps rate hike by the Bank of England last Thursday would be enough to support the pound in the coming months, as the pound has been affected by the Fed’s hawkishness. The BoE meeting weighed down. exchange rate of sterling against the dollar.”
“The Bank of England expects inflation to peak around 13% in December. However, the market expects inflation to be higher by next year.”
“Uncertainty over inflation, energy supplies and the political outlook could weigh on GBP/USD in the coming months. The UK’s second-quarter GDP release this Friday should confirm the negative sentiment in the market.”
⑥ Rabobank: The market considers the possibility of a rate cut by the Bank of England
Michael Every, an economist at Rabobank, said: “In the eyes of the market, central banks are pursuing stupid monetary policy, the yield curve continues to invert, bond yields are falling (even on short-term bonds!), and official rates are rising. "
"For example, when the BoE raised rates by 50 basis points to 1.75% (the highest level in 27 years), the 2-year gilt yield fell from 1.91% to 1.84%, and future rate hikes were ruled out, The possibility of a rate cut was factored in, and the 10-year yield slipped 3 basis points to 1.88%."
⑦ Pantheon Macroeconomics: The Bank of England is expected to raise interest rates by 25 basis points in September
"All in all, our judgment is that the majority of committee members believe central bank rates should be raised further, but not to the extent that the market expects," said Samuel Tombs, chief UK economist at Pantheon Macroeconomics.
"As a result, we expect the bank rate to rise by 25 basis points in September and then a further 25 basis points to 2.25% in November, when the stance of fiscal policy should be clear."
“Then, we think the bank rate will remain at this above-neutral level until the end of 2023, there is no doubt that the wage price spiral has not formed. We then expect the bank rate to fall slightly to 2.00% by the end of 2023, if Fiscal policy is likely to fall further to 1.75% in 2024 if it is less stimulative before the next election."
8. TD Securities: EUR/GBP has more upside
Mark McCormick, global head of FX strategy at TD Securities, said: "The MPC's decision was not too shocking (8 to 1 for a 50 basis point hike) and was in line with our expectations for moderate rate hikes. That said, The rhetoric about the growth outlook may have helped reverse some of the sterling's strong price action on the eve of the meeting."
“The dovish BoE rate hike did not do the pound any favors, reflecting concerns about the outlook for economic growth and the prospect of a rate hike from the BoE. However, we also note the importance of global factors for the pound, which in the short term will Continues to favour USD. Our model shows more upside in EUR/GBP, implying a retest of 0.85 (GBP/EUR 1.1764).”
“The pound is closely linked to risk sentiment and global growth expectations. For the pound to make up for recent gains, the global environment has to turn more decisively positive. We don’t think the global growth story is out yet, so the BoE is likely to announce tomorrow’s U.S. data Provides a nice fade point ahead of the announcement. The euro is also at a steep discount, which suggests more upside in EUR/GBP.”