Omicron to stay MPC’s hand, but won’t prevent 2022 lift off

We wouldn’t completely rule it out, but we no longer expect the Monetary Policy Committee (MPC) to raise interest rates from 0.10% on Thursday 16^th December. We now think rates will rise to 0.25% in February and to 0.50% in May. But if the COVID-19 restrictions were ramped up, rates may not be raised until the second half of 2022. As a result, we have grown more confident that investors have gone too far in pricing in rates rising to almost 1.00% by the end of 2022.