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- Goldman Sachs likes 4-to-1 odds on Bank of England rate cut next month
Goldman Sachs likes 4-to-1 odds on Bank of England rate cut next month
Bloomberg reports that a Bank of England rate cut next month is starting to look like an attractive outside bet.
A third national lock-down in the U.K. is overwhelming positive sentiment on the vaccine rollout, and threatening to drag the economy into a double-dip recession. As a result, expectations are rising the BOE will ease policy at its Feb. 4 meeting.
Analysts at Goldman Sachs Group Inc. like the 4-to-1 payoff on a surprise move. “The possibility of a 10-basis-points rate cut taking the Bank rate to zero suggests positive risk-reward” in betting on lower OIS rates at the February meeting, strategists including George Cole wrote in a client note.
A BOE cut next month isn’t their base case: Goldman forecasts more incentives for banks to lend under the Term Funding Scheme and a faster pace of bond purchases.
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