Bank of England Seen to Deliver Five Quarter-Point Hikes in 2022

Source: Bloomberg

The United Kingdom’s central bank is expected to hike key policy rates five times in 2022, following the projected moves of the US Federal Reserve. EWU is down 0.27%.

• Money markets expect the Bank of England to implement five quarter-point rate hikes this year, lifting the key rate by a total of 125 basis points to 1.50%.
• The bets come after remarks of Federal Reserve Chair Jerome Powell citing the need to be flexible amid the inflationary uptick hitting nearly 40-year highs.
• Traders predict the borrowing costs to grow to 1% by June, paving the way for more bond sales.
• The increase could lead to the Bank of England’s start of its gilts sale from its 895-billion-pound bond portfolio.
• The expectations have driven the two-year UK gilts yields to surge to the highest level in over a decade.