BoE: market no longer under-pricing rate hikes? - ANZ

Analysts at ANZ explained that although the Bank of England’s 25bps hike overnight was done in concert with a 7-2 vote, it was perceived as dovish. 

Key Quotes:

"In particular, the statement removed the reference to the market under-pricing future hikes. Inflation is seen falling to 2.2% on 2 and 3-year horizons. 

UK 2-year and 10- year bond yields each fell 8bps in response. The BoE indicated that it believes the economy can grow at only around a 1.5% rate before inflation rises, with growth restrained by limited slack in the labour market and slow productivity growth. Activity indicators will be important to watch going forward."