The "gradual approach" of the Bank of England: Is the market misjudging the pace of interest rate cuts, ultimately resulting in a deeper-than-expected outcome?
The Bank of England is likely to cut interest rates at the meeting on May 8, and the market generally expects that the pace of subsequent cuts will accelerate. However, Analysts believe it is unlikely that the central bank will deviate from its rhythm of cutting rates once a quarter, but the final interest rate may fall below the levels currently anticipated by traders. There is currently a gap between market expectations and reality, as the market has priced in three rate cuts at the Bank of England's next four meetings, which is highly correlated with the Federal Reserve's expected rate cut curve. At the same time, the market expects the Bank of England's interest rate to bottom out at 3.4%, about 100 basis points lower than the current level. Analysts hold a cautious attitude toward both expectations, believing the Bank of England is short.
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