Interest rate hikes unlikely to be a repeat of 2022, says Bank’s chief economist

The Bank's chief economist, as reported by Anna Wise, argued that any future interest rate hikes are unlikely to replicate the aggressive tightening cycle seen in 2022. The central transmission channel here is inflation expectations and the rate path: markets that have priced a sharp, sustained tightening may need to revise their assumptions toward a shallower or more measured trajectory. Short-dated government bonds and rate-sensitive segments such as mortgage-linked credit and long-duration equities would be most directly exposed to any shift in the expected policy path, since their valuations depend heavily on discount rates. Traders should watch the next inflation print and the Bank's accompanying guidance on forward rates, as these will determine whether the economist's view is reflected in changes to the front end of the yield curve.

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