With high inflation still proving to be a problem in the UK, the BOE is being cornered into another rate hike this week. A 25 bps move is the most likely outcome and that is something that markets are well expecting.
The OIS market pricing is in fact showing 100% odds already factored in for a 25 bps rate hike tomorrow. And here is the evolution of the curve since the UK CPI report that came out last month on 19 April:
At one point, traders were even rather assured of the bank rate hitting 5.00% but that has toned down a bit in the past week. That said, the trajectory remains clear in that the BOE still has work to do - or at least markets are convinced that they will have to in order to tame inflationary pressures in the UK.
