By leaving interest rates at 0.10% and continuing its QE asset purchases, the Monetary Policy Committee (MPC) didn’t set off any early fireworks today. But it did throw on the bonfire the markets’ expectations that interest rates will rise to 1.0% by the end of next year. This provides some support to our view that rates will end next year at 0.50% and explains why gilt yields and the pound have fallen today.
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