– JPM brings forward its BoE hike path to Q1.

At the same time we initiate a received position in 1y1y SONIA swaps, following today’s move at 0.62%. While hikes may happen sooner, we struggle to see “more” hikes taking place. Last but not least, we find the risk-reward profile of such positions attractive, especially as it will be first to move shall the tone in the UK market turn less upbeat”

Barclays: BoE said “any future initial tightening of monetary policy should be implemented by an increase in Bank Rate, even if that tightening became

appropriate before the end of the existing UK government bond asset purchase programme.” Barclays view this is as a highly unlikely outcome since by November only £21bn of purchases will remain to be completed of the original £150bn programme and hiking rates while buying bonds would be a very confusing message for the MPC to communicate. Add to this the admission that “all members agreed that the previous formal guidance was no longer useful in the present

situation” and the market will now struggle to interpret the MPC’s reaction function in lieu of clearer guidance. This leaves the front end vulnerable to rapid and volatile repricing into the November MPC meeting as the front-end investors will seek further guidance from a sequence of MPC speakers that generally emerge after an MPC meeting in order to clarify the central message To that end, Barclays believe Ben Broadbent is likely to be the one who will carry most weight with the market as he now becomes the median voter on the committee.

JPM: JPM brings forward its BoE hike path to Q1.

“- This was not a forecast meeting and the MPC had the option of using greater ambiguity. But the tone of the minutes was more hawkish than expected, and opens the door both to a February hike and two rate increases next year

– While the MPC wants to wait to assess the impact of the end of the furlough scheme – which we now do not expect to be very disruptive – it sounds as though the committee is preparing for a 1Q22 rate hike. We bring forward our call for the first (15bp) rate increase by one quarter to 1Q22, and pencil a second (25bp) hike for 3Q22

Citi: The MPC’s reaction function became another notch more hawkish, revealing most members think a rate hike is possible this year, even while asset purchases continue. Rising unemployment will probably still prevent November hike, but not for long. We now expect a 15bp rate hike in February 2022 and 25bp in May, triggering balance sheet reduction. If unemployment does not increase as much as we expect, the Bank will likely hike in November and reach its terminal rate of 1.25% in early 2024.

MS: MS economists have a more bearish view on furlough windup and growth than the BoE, and so continue to expect liftoff only in August 2022. GBP rallied following the release as markets started to price in the possibility of a 2021 hike. WMS think the hawkish BoE rhetoric, in combination with stronger risk sentiment, should support GBP on the crosses for now

GS: GS expect the MPC to wait until 2022 for its first hike as growth momentum is slowing, there are likely to be some frictions from the furlough unwind, and it will take time to get clarity on the underlying strength of the labour market. Therefore, while GS think next February is a live possibility, they maintain their baseline expectation for the first hike in May 2022, but now see risks skewed in the direction of earlier lift-off.