BoE too hawkish, investors have gone too far the other way

We agree with investors that the Bank of England's stance this week was overly hawkish. Even so, we think investors are over-estimating how quickly rates will be cut. Given the UK economy is not as weak as the euro-zone economy and measures of domestic inflation in the UK are stronger than in the US, we remain convinced that the Bank will cut rates later than the Fed (Q1 2024), the ECB (Q2 2024) and current UK market pricing of May.