Traders Ramp Up BOE Bets to See Key Rate at 1.25% Next Year
- Money markets resume tightening wagers last seen in November
- Surprise hike last week buoys belief in steeper hiking cycle
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Traders are betting the Bank of England will look through risks from the omicron strain to hike its key interest rate above 1% next year for the first time since 2009.
Money markets are now pricing 100 basis points of policy tightening from the U.K. central bank in Dec. 2022, according to sterling overnight index swaps. That would push the BOE rate up to 1.25% from 0.25% currently, leaving behind the record-low levels of the pandemic era.