What If the Bank of England Doesn't Raise Rates?
- Swaps, linkers, credit used as shield from possible shock
- Markets pricing about 90% chance of rate hike on Nov. 2
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What if the Bank of England chose to not increase interest rates on Thursday?
Only eight of the 60 economists polled by Bloomberg are predicting U.K. interest rates to stay on hold at a record low 0.25 percent on Nov. 2, while market pricing sees just a 10 percent chance of this. Yet given past examples of the BOE jolting investors by changing its messaging, portfolio managers need to factor in all possibilities. Positioning in both the sterling spot and options markets signal investors have also taken cover against a hawkish outlook.