What's priced in for the Bank of England

<p>The market continues to anticipate a Bank of England rate hike later this month and the strong possibility of another one in November.</p><p>High UK inflation is problematic for the Bank of England as it tries to tame runaway inflation but chief economist Hew Pill wants to keep rate at a higher plateau for longer, rather than hiking further. In comments in South Africa last week he demonstrated a path that he compared to Table Mountain with a long period of rates around the current level of 5.25% and said he "tended to favour" it.</p><p>His projections also showed inflation falling to the BOE's 2% target if rates were left at that level for three years.</p><p>That was too cryptic for the market as he also said that “core inflation remains stubbornly high and doesn’t show any obvious decline.” </p><p>The market is pricing in an 88% chance of a 25 bps hike on September 21 with a 44% chance of a hike at the following meeting in November. That would bring the BOE to 5.75%.</p>

This article was written by Adam Button at www.forexlive.com.