BoE Rate Hike Expectations Slide into 2027

Investors' expectations for a Bank of England interest rate hike have shifted into next year. According to Euronext Markets, market prices indicate that investors do not fully price in a quarter-point rate increase until the February 2027 meeting.

The data shows that by the time of the BoE's December 17 rate announcement, only 24.3 basis points of rate increases are priced in, down from over 25 bps for most of August.

For the September 17 meeting, less than 4 bps of tightening is priced in, implying a 15% chance of a hike. In contrast, the European Central Bank's decision on September 10 has 24 bps of tightening priced in.

The British 10-year government bond yields were down by 2 bps on Thursday at 5.01%, close to the two-week low of 4.979% reached on Wednesday.