Following relatively cautious guidance just two weeks ago, Bank of England (BoE) Governor Bailey’s press comments this week have weighed on sterling, and drove a softening in near-term UK rate expectations.
In our Weekly Brief (23-27th Sept), following the Fed and BoE September meetings, we noted that the sharp Fed pivot of a 50bps cut raised questions for the other major central banks.
However, we also stated a more conservative approach may put the BoE at odds with the Fed if it continues with its easing cycle at an accelerated pace in the coming months.
The comments by the Governor adds to the instances of muddled messaging by the BoE in recent years, and begs the question as to what has shifted his outlook in such short order.
