The market is firmly expecting a 50 bps rate hike but as mentioned earlier in the day here, it might not be quite a straightforward one when it comes to the BOE as opposed to the ECB today.
We've already seen dissenters in the December meeting here and that might set up for a bit of a risk that today's decision might surprise with a 25 bps rate hike instead. Since the last meeting, UK economic data has worsened with retail sales imploding and recession risks continue to be on the rise as the cost-of-living crisis intensifies.
I would expect policymakers to want to figure out a balance between maintaining some degree of hawkishness as they finish off the tightening cycle, and also needing to slow things down as they risk sending the economy off the rails.
Quite frankly, the most surprising thing that the BOE could do today is to put forward a hawkish 50 bps rate hike. However, I'd rate the odds of that as being pretty low among all the likely outcomes. As for a 25 bps move, I think that is certainly a possibility somewhere in the region around 35:65 when pitted against a 50 bps rate hike today.
