The rates market fully prices in a 25 bps BOE rate cut by September 2020
Market participants see higher odds of a rate cut after poor UK data today
The more sluggish UK data earlier makes a more compelling case for the BOE to cut its bank rate, especially after BOE policymakers have hinted to lean in that direction recently.
The OIS market has now fully priced in a 25 bps rate cut by the September meeting with odds of a rate cut by the May meeting sitting at ~88%.
It has been a dramatic rise in odds and pricing, especially in the build up to the 30 January policy meeting. The OIS market had only priced in ~23% of a 25 bps rate cut for that at the end of last week, but those odds now sit at ~51%.
As mentioned earlier, it may take a bit more than just pre-election data to really tip the scales but if we get more sluggish UK data in the next two weeks - inflation and labour market notably - then perhaps it could help the BOE feel easier about pulling the trigger.