Market pricing for many rate hikes conflicts with jobs outlook

While there are plausible scenarios in which the Bank of England hikes interest rates in response to the leap in energy prices caused by the conflict in the Middle East, the jumps in market rate expectations and gilt yields in recent days seem out of whack with the economic backdrop. Indeed, the markets seem to be placing very little emphasis on the energy price shock raising an already elevated unemployment rate further. So if there is a rate hiking cycle, it may prove to be smaller than the markets are expecting.