Standard Chartered sees another BOE rate hike in February after hawkish tone

Standard Chartered Predicts February BOE Rate Hike After Hawkish Policy Meeting

Analysis of Bank of England's Recent Policy Decision and Market Reactions

Overview of the Rate Hike Decision

Nov 5 (Reuters) - Standard Chartered said it expects the Bank of England to deliver an additional 25-basis-point rate hike in February due to the central bank's hawkish tone following its first interest rate hike in over three years on Thursday.

The central bank's Monetary Policy Committee voted 8-1 to raise rates to 4% from 3.75%, with the one dissenting member voting for a bigger hike, in contrast with expectations in a Reuters poll that a dissent would likely be to keep rates on hold.

Details of the Monetary Policy Committee Vote

Catherine Mann, who last month said the BoE had been slow to reassure markets that it had a grip on inflation, voted for a half-point interest rate increase to 4.25%.

"The Bank of England (BoE) hiked its base rate by 25bps as expected, but the split on the Monetary Policy Committee (MPC) was more hawkish than we had expected," Standard Chartered said in a note.

Standard Chartered's Forecasts and Influencing Factors

The brokerage previously expected the BOE to hold rates steady after its November rate hike.

Standard Chartered expects further hikes to depend on the direction of the Middle East conflict and energy prices, with the recent US midterm election results adding to the uncertainty.

Potential Triggers for Further Rate Hikes

"An escalation in the Middle East and an accompanying move higher in energy prices would increase the risk of an earlier BoE hike being delivered at the December policy meeting."

Outlook for Monetary Easing

Standard Chartered expects monetary easing to begin again from the fourth quarter of next year, followed by three further 25-basis-point cuts in the first three quarters of 2028. But it cautioned that there is a wider margin of uncertainty "shaped by the duration of the Middle East-induced energy shock".

(Reporting by Kanchana Chakravarty in Bengaluru; Editing by Leroy Leo)