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2025-12-18 20:25:44
[Market Interpretation: Market Fully Prices Up Next Bank of England Rate Cut to June Meeting, Not April as Previously Expected] ⑴ Analysts point out that the Bank of England's rate cut decision itself was not a major surprise, but the market reaction leaned towards a "hawkish" interpretation. ⑵ After the decision was announced, the market reduced its bets on future rate cuts, and the next rate cut is now fully priced in to be postponed to the June meeting, rather than the previously expected April. ⑶ Analysts believe that if the pound rebounds as a result, it will be a completely predictable reaction, and the jump in UK government bond yields confirms this. ⑷ Some market participants had expected a 6-3 vote, meaning more members supported the rate cut, but the actual narrow 5-4 majority weakened the dovish signal of policy. ⑸ Nevertheless, analysts point out that inflation fell faster than the Bank of England expected, and its statement still sent a clear signal that bank interest rates may decline at a slightly faster pace, opening the door to further rate cuts. (6) The core argument is that once inflation is clearly on track to return to the 2% target, and the downtrend unexpectedly accelerates this process, the Bank of England will be unwilling to tolerate economic growth remaining below its potential level. This forms the logical basis for further easing in the future.
