And while the market is pricing about 30 basis points of rate cuts between September 2023 and March 2024, those bets are overdone, she said. Traders are less certain that the BOE will deliver a half-point hike next week, with swaps indicating a 90% probability. ECB officials including Gediminas Simkus have stressed risks around the stubbornness of core inflation, remarking this week that 50-basis-point rate hikes “must be taken unequivocally”. Swaps linked to US central bank meetings imply that traders expect almost 50 basis points of rate cuts by year end. “Their job is to convince markets that the rate cuts that have been priced have no place to be there,” he said.

Source: The Edge Markets January 28, 2023 14:05 UTC