 Okay, welcome back to the channel and we've just got a couple of minutes until the latest Bank of England interest rate decision Just looking at interest rates here in the UK over the last 20 years What's going to be particularly interesting from a historical standpoint is today markets very much expected them to increase interest rates again For the second consecutive meeting as you can see here rates Haven't risen in back-to-back meeting since going back all the way to the initial rate sequence that we saw back in 2004 so it's quite meaningful from that perspective. Why and what's the main rationale for this? Well Actually, CPI is being the main culprit and we know that UK CPI came in at 5.4 percent at the end of last year December 2021 it's the highest reading since March of 1992 inflationary pressures persisting naming from namely from rising energy prices supply chain disruptions and low base effects from the previous year So much in a similar vein to the Fed the market's been quite aggressive in Pricing in tightening of a fairly rapid pace coming from the Bank of England now a few other quick things As I just mentioned markets are very much Expecting rates to rise today in fact They're close to pricing in one and a half percent interest rate by the end of the year implying the biggest tightening of policy in the calendar year since 1997 that was to materialize So one of the key things we're looking out for here is of course the rate announcement the vote split expected to be unanimous But they've also got the minutes and then the commentary that we'll hear Alongside this as it comes out because this is the February meeting So we'll also get the monetary policy report looking at projections for growth and inflation to determine their rate path in the future Biggest thing to look out for here is any pushback against this very aggressive market pricing Okay, we've just got a couple of seconds till it comes out So I'm going to turn on the squawk so you can hear everything coming out live Okay, I have in front of me here the cable chart cable futures sterling dollar about five seconds now to the release So hike is expected unanimous as expected 75% so that they were you know as they needed to hide those are divergence in views there They're like some Rams and Saunders hassle a man posing to raise rates by 50 basis points of zero spot seven five percent media upside in cable 136 to the upside It also voted at 9 0 to reduce corporate bond purchase target to zero for my 20 billion pounds Yes, so at the moment just while the squawk continues to go the biggest reason for that pop there is that there were a couple of Members who were wanted an immediate 50 basis point rate hike So really ramping it up the pace and that was very unexpected No real economists on the street were expecting that type of move In fact, there were four Bank of England dissenters who all wanted a 50 basis point rise to zero point seven five percent So although the decision was unanimous. They all wanted a hike Four of them so only just out voted by five to four wanted to go even more aggressive So heads to the pop we've seen here initially in price Okay, just switching my screens for a moment one of the interesting things here is that this is looking at the MPC breakdown via the dovishness or hawkishness that the market typically assigns to these members and We had four dissenters all looking for 50 basis points Of increase here and those were Ramsden and Saunders So they've always been the far-reaching most hawkish members that's come as very little surprise But what is a bit of a surprise is the other ones are Haskell and man Jonathan Haskell sits here on the spectrum Catherine man sits here. And so rather than Hupill the chief economist or Bailey himself or broadband is actually some of those more on the dovish side Disposition that actually wanted more aggressive near-term action, which is quite surprising Here are the Bloomberg headlines. So as you can see other than the ones we've just covered they begin the QE unwinding They plan to fully unwind stock of corporate bomb purchases So yeah, overall initial take is this is pretty aggressive in terms of on the hawkish side They will consider actively selling guilt when the key rate is at 1% Further modest tightening is likely in the coming months is the type of language that they're using So in terms of market pricing now the market has pulled forward their bank coming than hike bets They now see the bank rate at 1% by May So again a surprise here. They've taken it from a quarter basis point to half So the market expecting another 50 basis points by May May would be when the next monetary policy inflation report comes out They come out four times a year February May August and November quick look here on a 90 minute candlestick Just to give us some perspective on the price action The overall move certainly is a big pop on the initial intraday move, but it's not huge I would say I mean we've gone from around 135 50 up to around 36 27 and you can see here The R2 just providing in the future is a little bit near-term resistance But yeah a a bit of that magnitude 75 pips or so It's not by far the biggest I've ever seen but certainly There's enough ammunition in these hawkish comments to provide that move the real Crux of where we end now really comes down to the press conference, which will begin shortly Just while we wait for the press conference Obviously one of the things that this would indicate then is that they're probably going to be more subsequent rate Hikes from the Bank of England in the coming months and something that's really grabbing the headline news today is Tied to what is this inflation? Focus that they have and that is the electricity and gas bills typically For a typical household are going to go up by 54% it came out earlier today Quates to around 700 pounds a year or so in April Every six months to get a context of what this is and and what this energy price cap is is every six months Often the energy regulator reviews and reviews the maximum price that supplies in England, Wales and Scotland can charge domestic customers On a default or standard or a variable tariff. So this is when they set out on these semi-annual Reviews what the price cap is of that moment in time and about 15 million households saw their energy bills increased by 12% When those last update updated excuse me in October and now they're going to go up by 54% and Prices were very much well expected to go up again in October when the cap is next reviewed. So Again, the big component of course is namely rising energy prices are contributing to this CPI number of 5.4% I have seen Wall Street banks Predicting the inflation the UK could go as high as 7% So obviously still a long way to run and would give the rationale then of why Some of these Bank of England members wanted to be uber aggressive with their go hard go strong go fast Mentality to get ahead of that problem for it then to turn off and not have to play catch up later down down the line