Archive

September 10, 2025
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BoE QT: Pruning A Bad Policy

  • The BoE’s annual Quantitative Tightening announcement in September should see it prune the targeted size, we expect by £20bn to £80bn, concentrated in the long-end.
  • Fewer maturities in the year ahead would otherwise put too much pressure on active sales into a market that lacks appetite, especially with LDI demand disappearing.
  • Pruning the size and duration delays costs crystallising by several billion a year, which the Chancellor will welcome, yet QT’s poor design remains an expensive fiscal disaster.

By Philip Rush

September 04, 2025
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BoE Survey Says Inflation Persists

  • CFOs are telling the BoE that they plan to keep raising prices by more than 3% in 2026. The BoE should take notice, as this survey’s previous warnings have proven accurate.
  • Expected increases reflect the passthrough of further wage increases beyond a pace consistent with the target. They exceed even our already hawkish forecasts.
  • The BoE is unlikely to realise the sharp drop in wage growth it expects by year's end, without a shock to break the current regime, bolstering our call for no more rate cuts.

By Philip Rush

September 03, 2025
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Cutting After Pauses

  • The BoE and Fed rarely resume cutting cycles after a pause, yet the Fed seems set to break its hold with a cut just as the BoE and ECB enter their own pauses.
  • 2002-03 is the best historical parallel for the Fed, which signals potential cuts should be shallow and are likely to be reversed. Politics is no match for the fundamental need.
  • Persistently excessive UK pressures should prevent the BoE from cutting in November or beyond, with a quarterly pause historically unlikely to resolve in another rate cut.

By Philip Rush

August 20, 2025
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UK CPI Trend Extends Excess In July

  • Another upside surprise in UK CPI inflation extended the accumulated drift to 1.3pp over the past year, yet was only 0.2pp above our old call.
  • This outcome matched the BoE’s latest call, with airfares driving the rise, and median pressures holding slightly above a target-consistent pace, so there is less policy impact.
  • The MPC was finely balanced in its support for August’s cut, and this rise will not lead dissenters to support past action, let alone another cut, which we still doubt occurs.

By Philip Rush

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