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Bloomberg
Traders have ramped up bets for the Bank of England (BOE) to lower interest rates at the end of 2020 after Prime Minister Boris Johnson reignited fears of a no-deal Brexit.
Money markets see an 80% probability of the central bank cutting by 25 basis points in December 2020, up from about 30%. While Johnson’s victory last week fueled immediate optimism for a smooth departure from the European Union, he has
since announced plans to prevent Britain extending its transition period past the end of 2020, spooking financial markets.
The bets reflect concern that further Brexit uncertainty could usher in the kind of economic gloom that would add pressure on the central bank to adopt a more growth-supportive policy stance.
The BOE’s Monetary Policy Committee is forecast to keep rates at 0.75% at Thursday’s review, though policy makers Michael Saunders and Jonathan Haskel are expected to repeat calls for easing amid mounting signs of economic weakness. The last time traders saw similar odds was when Trump suggested a deal with China could be delayed.