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MPC likely to revert to “traditional” cut

The key question ahead of the MPC meeting that concludes on Friday 4th October is not whether the committee will opt to cut rates again, but rather by how much. We think it will jettison the unconventional 35bp cut from the last policy meeting and revert to a more traditional 25bp cut. Even this would bring the repo rate down to its lowest since early 2010. Further loosening might still follow in the near term but we are firmly non-consensus in expecting modest rate hikes by the end of next year.

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