Posted 1/20/2024, 6:00:00 AM
Bank of England Faces Pressure to Scale Back Rate Hike Rhetoric Amid Gloomy Economy
- Bank of England faces calls to drop language signaling further interest rate hikes and adopt more dovish stance in line with economic outlook
- BOE credibility at risk if guidance not updated at Feb 1 policy meeting; current hawkish stance outdated given lower inflation and growth
- BOE communication challenges include pivoting guidance, preparing markets for potential cuts, and reconciling forecasts with skeptical internal views
- Politics complicates messaging, with looming election and upcoming budget possibly delaying cuts
- Tension between BOE projections based on optimistic market rate path vs more downbeat internal analysis, echoing forecast errors during 2022 gilt selloff