BoE Hawks Scream As Inflation Seen Soaring To 7%

Faced with the highest inflation in three decades, the Bank of England on Thursday raised rates for a second consecutive meeting. It was the first back-to-back move since 2004. The decision was split. The vote was 5-4. Dissenters favored a 50bps move. For now, hawks will have to settle for 25bps, but the message was overwhelmingly hawkish. The vote to commence balance sheet runoff via the cessation of gilt reinvestments was unanimous. The bank will engage in active selling of the corporate b

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2 thoughts on “BoE Hawks Scream As Inflation Seen Soaring To 7%”

Central bankers in the developed world (ex- Japan) have decided to take aim at inflation by raising short term rates and in some cases trimming their balance sheets. It is a reasonable posture but it portends a lot of pain to come. As Albert Edwards, quoted by you has said (paraphrasing), it is when central banks go on an easing cycle that equities must beware. That will happen in the not too distant future.

I am curious to understand how the US equities markets might respond to effectively shutting down the ON RRP program first? It seems that if that happens, US banks would need to purchase about $1.6T in Treasuries – which could be from the Fed- therefore reducing their balance sheet.
If more liquidity is needed in the future, they could ramp up the overnight RRP program again.
Seems like a good place to start- but IDK.