STIR: 95bp Of Cuts Still Priced Through Dec, Tomorrow's Guidance Eyed
GBP STIRs are little changed this morning, looking through the previously covered Chinese policy easing announcement and reports pointing to the U.S. and UK nearing a trade accord.
- SONIA futures flat to +1.5.
- BoE-dated OIS is within 1bp of yesterday’s closing levels, showing 95bp of cuts through year-end. A reminder that ~88.5bp of cuts were priced through year-end early yesterday after over 100bp of easing was priced over the same horizon last week.
- The next 25bp cut is still fully discounted come the end of tomorrow’s decision.
- An outcome other than a 25bp cut would be surprising but there will be a number of things to watch: any changes to the guidance and the inflation/growth forecast changes, the vote split and the introduction of new scenarios.
- For the guidance we expect "restrictive" and "careful" to remain but we question whether "gradual" will be removed and talk through the rationale for this potential change.
- On the vote split, consensus expects 8-1 but neither Dhingra nor Mann dissenting for a 50bp cut would be a huge surprise. Taylor or Ramsden are plausible possible dissenters that would be more noteworthy - and any other member voting for a 50bp cut or for Bank Rate on hold would be a huge surprise.
- Click for our full preview.
- Expect macro news flow and cross-market moves to dominate between now and the BoE decision, with little of note on the UK calendar in that period.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA Rate (bp) |
May-25 | 4.200 | -25.9 |
Jun-25 | 4.064 | -39.5 |
Aug-25 | 3.861 | -59.9 |
Sep-25 | 3.721 | -73.9 |
Nov-25 | 3.560 | -89.9 |
Dec-25 | 3.510 | -94.9 |
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