ING Sees No Rate Hike at Upcoming BoE Meeting Amid Market Expectations

Analysts at ING expect no change in the Bank of England's (BoE) policy rate at its upcoming meeting, despite market expectations for substantial tightening.

According to Michiel Tukker and Padhraic Garvey from ING, UK rates are highly sensitive to oil price moves. They argue that current market pricing of around 70 basis points of hikes over the next 12 months looks stretched given the already restrictive 3.75% policy rate.

The pair notes that sterling rates are particularly tied to oil prices, with a $10 move higher in oil adding some 20 basis points of expected BoE tightening. They predict that even if some votes for hikes materialize at the meeting, the doves will likely maintain a majority.