BOE's Ramsden Signals Rate Hike Readiness Amid Ongoing QT Efforts

Bank of England Deputy Governor Dave Ramsden reinforced the central bank's commitment to its quantitative tightening (QT) strategy, which aims to gradually reduce the Bank's holdings of government bonds. This effort has been ongoing since 2022.

Ramsden emphasized the credibility of the QT strategy and stated that the Bank would be prepared to raise interest rates if inflation increases. Currently, the Monetary Policy Committee (MPC) maintains the Bank Rate at 3.75%, while inflation is at 2.6%. Projections suggest a potential rise in inflation.

Market pricing suggests a decreased likelihood of a rate cut in November and indicates a strong expectation of a 25 basis point rate hike at the upcoming meeting, according to market odds reflected in the term structure contracts.