The Bank’s decision to leave interest rates at 5.25% for the second time in a row and to double down on the message that rates cuts are far away supports our view that rates will stay at 5.25% until late-2024 rather than until mid-2024 as investors expect. That said, a mild recession in the meantime may mean that rates are cut to 3.00% in 2025 rather than to the level of 4.25-4.50% priced into the markets.
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