The Bank of England would like to end its rate hike cycle as soon as possible – Commerzbank

The Bank of England (BoE) could soon reach the end of its rate hike cycle. For this reason, Commerzbank economists bearish GBP view.

Skeptical view of the pound sterling

“The BoE is clearly concerned that large rate hikes may excessively slow down the economy. In view of the painfully slow decline in inflation rates, the question nevertheless arises as to whether concerns of this nature may be a bit premature. At this time it is important to avoid second round effects, and it is necessary to anchor inflation expectations. In this context, any doubts about the BoE’s ability to fight inflation resolutely would be counterproductive.”

“It is of little use for the BoE to warn that inflation could be more stubborn and that it should therefore remain vigilant, while at the same time pointing out that would like to end its cycle of rate hikes sooner rather than later and that any small improvement in the data could be reason enough to do so. In this context, we maintain our skeptical view towards the pound sterling“.