Overview
This survey forms part of the Bank’s quantitative market intelligence gathering. It is formulated by Bank of England staff, and enhances policymakers’ understanding of market expectations. The questions involve topics that are widely discussed in the public domain, and never presume any particular policy action. Monetary Policy Committee (MPC) members are not involved in the survey’s design.
Survey respondents originate from a broad set of market participant firms, selected by the Bank based on a number of criteria, including: (i) relevant market activity in UK rates or money markets; (ii) expertise in UK rates markets and/or UK monetary policy; (iii) willingness to participate regularly in the survey and in the Bank’s market intelligence activity; and (iv) membership of one of the Bank’s external market committees.
Please contact MarketParticipantsSurvey@bankofengland.co.uk for queries or for further information.
Survey results
The survey was open from 30 November–2 December 2022 with responses being received from 60 market participants. For most questions, median responses across participants, along with the 25th and 75th percentiles, are reported.footnote [1] For questions that ask respondents to weight different factors or assign probabilities to specific outcomes, the mean weighting is reported. For questions that ask respondents to select one option from a given set of possibilities – the respondent count against each option is reported.
Question 1: Expectations for Bank Rate
1a) What is your central expectation for Bank Rate after the following MPC meetings (%)? Bank Rate is currently at 3.00%.
25th percentile | 50th percentile | 75th percentile | Number of responses | |
|---|---|---|---|---|
15 December 2022 MPC | 3.50 | 3.50 | 3.50 | 60 |
2 February 2023 MPC | 3.75 | 4.00 | 4.00 | 60 |
23 March 2023 MPC | 4.00 | 4.25 | 4.25 | 60 |
11 May 2023 MPC | 4.00 | 4.25 | 4.50 | 60 |
22 June 2023 MPC | 4.00 | 4.25 | 4.50 | 60 |
3 August 2023 MPC | 4.00 | 4.25 | 4.50 | 60 |
21 September 2023 MPC | 4.00 | 4.25 | 4.50 | 60 |
2 November 2023 MPC | 4.00 | 4.25 | 4.50 | 59 |
One year ahead (December 2023 MPC) | 4.00 | 4.25 | 4.50 | 60 |
18 months ahead (June 2024 MPC) | 3.00 | 3.75 | 4.50 | 59 |
Two years ahead (December 2024 MPC) | 2.63 | 3.25 | 4.00 | 59 |
Three years ahead (December 2025 MPC) | 2.50 | 3.00 | 3.50 | 54 |
1bi) The following question asks you to assign probabilities to different Bank Rate outcomes immediately following the December and February MPC Meetings. Please indicate the percentage chance that you attach to Bank Rate being at the following levels after the upcoming 15 December 2022 meeting (responses should sum to 100%). (a)
Mean weighting (%) | Number of responses | |
|---|---|---|
<3.00% | 0.2 | 56 |
3.00% | 1.8 | 56 |
3.25% | 10.9 | 56 |
3.50% | 65.2 | 56 |
3.75% | 21.3 | 56 |
4.00% | 0.6 | 56 |
>4.00% | 0.1 | 56 |
1bii) Please indicate the percentage chance that you attach to Bank Rate being at the following levels after the upcoming 2 February 2023 meeting (responses should sum to 100%). (a)
Mean weighting (%) | Number of responses | |
|---|---|---|
<3.00% | 0.2 | 56 |
3.00% | 0.5 | 56 |
3.25% | 2.1 | 56 |
3.50% | 10.0 | 56 |
3.75% | 33.7 | 56 |
4.00% | 40.8 | 56 |
4.25% | 10.7 | 56 |
4.50% | 1.7 | 56 |
>4.50% | 0.3 | 56 |
1ci) What do you see as the peak level for Bank Rate in this cycle? (a)
25th percentile | 50th percentile | 75th percentile | Number of responses | |
|---|---|---|---|---|
Peak rate | 4.00 | 4.25 | 4.50 | 59 |
Footnotes
- (a) Note, respondents were asked whether their expected level and timing of the peak Bank Rate in this cycle was reflected in their central expectations for Bank Rate responses in question 1a. Where respondents selected ‘Yes’ their peak level was taken from those responses. 59 respondents answered the question this way.
1cii) And at which MPC meeting would you expect this peak to occur (month/year)? (a)
25th percentile | 50th percentile | 75th percentile | Number of responses |
|---|---|---|---|
March 2023 | March 2023 | May 2023 | 59 |
Footnotes
- (a) Note, respondents were asked whether their expected level and timing of the peak Bank Rate in this cycle was reflected in their central expectations for Bank Rate responses in question 1a. Where respondents selected ‘Yes’ their peak level was taken from those responses. 59 respondents answered the question this way.
1ciii) Focusing on your expectations for the peak level of Bank Rate in this cycle please indicate the percentage chance that you attach to Bank Rate peaking within the following ranges (responses should sum to 100%).
Mean weighting (%) | Number of responses | |
|---|---|---|
At the current level of 3.00% | 0.4 | 57 |
3.01%–3.25% | 0.7 | 57 |
3.26%–3.50% | 3.9 | 57 |
3.51%–3.75% | 9.8 | 57 |
3.76%–4.00% | 18.6 | 57 |
4.01%–4.25% | 20.7 | 57 |
4.26%–4.50% | 18.7 | 57 |
4.51%–4.75% | 10.9 | 57 |
4.76%–5.00% | 7.0 | 57 |
5.01%–5.25% | 5.0 | 57 |
>5.25% | 4.3 | 57 |
1di) With reference to your answers to 1a on central expectations for Bank Rate, how would you describe the balance of risks surrounding your expectations for Bank Rate at the following horizons?
Count | |||
|---|---|---|---|
Between now and the one-year point | At the two-year point | At the three-year point | |
Risks skewed towards a higher path for Bank Rate | 24 | 12 | 10 |
Risks to Bank Rate path broadly balanced | 27 | 35 | 29 |
Risks skewed towards a lower path for Bank Rate | 8 | 12 | 17 |
1dii) In its November minutes, the MPC observed that the market implied path for Bank Rate was rising to a peak in 2023 Q3, before falling back. Reflecting on this and your responses to the questions above, what percentage chance do you attach to an initial rate cut of any size occurring within the next year?
Mean weighting (%) | Number of responses |
|---|---|
29.8 | 57 |
1e) Where do you see the level of Bank Rate at which monetary policy is neither expansionary nor contractionary (often referred to as the neutral, natural or equilibrium rate) (%)?
25th percentile | 50th percentile | 75th percentile | Number of responses |
|---|---|---|---|
2.50 | 3.00 | 3.50 | 59 |
1f) Since the November MaPS response window closed UK short rates have fallen materially from their peaks. For example, the one-year one-year forward swap rate has decreased 85 basis points (as at 5pm on 29 November) since 21 October. Please weight the following factors (%) in order of importance in affecting this decrease in the one-year one-year forward swap rate. (Responses should sum to a total weight of 100% across these factors.)
Mean weighting (%) | Number of responses | |
|---|---|---|
Global factors pushing down on the UK inflation outlook | 16.7 | 58 |
The impact of recent fiscal announcements on UK domestic demand | 26.9 | 58 |
Investors requiring a lower premium to invest in UK assets | 16.1 | 58 |
Changing perceptions about the MPC’s reaction function | 11.6 | 58 |
Other domestic factors pushing down on the UK inflation outlook | 5.3 | 58 |
Receding market turbulence, illiquidity and other technical factors in UK short rates | 20.0 | 58 |
Other | 3.4 | 58 |
1g) It was noted in the November Monetary Policy Report that the ‘The path for Bank Rate implied by the latest Market Participants Survey is lower than the market curve’. To the extent this remains true, please weight the following factors in terms of their importance in affecting the gap between the Market Participants Survey central path for Bank Rate and the market implied path. (Responses should sum to a total weight of 100% across these factors.)
Mean weighting (%) | Number of responses | |
|---|---|---|
Domestic factors skewing the balance of risks to Bank Rate to the upside | 38.9 | 57 |
Global factors skewing the balance of risks to Bank Rate to the upside | 26.1 | 57 |
Market illiquidity/volatility and other technical factors in UK short rates | 31.7 | 57 |
Other | 3.2 | 57 |
Question 2: Expectations for balance sheet
2a) At its September meeting the MPC agreed to reduce the stock of UK government bond purchases financed by the issuance of central bank reserves over the following twelve months by £80 billion (comprising both maturing gilts and gilt sales), to a total of £758 billion. Following the Bank’s News Release on 18 October, Asset Purchase Facility (APF) gilt sale operations commenced on 1 November. As of 5pm on 29 November 2022 the total stock of gilts held for monetary policy purposes was £834 billion. (A reduction of around £4 billion since the September MPC meeting). Noting this, what is the reduction in the stock of purchased gilts, comprising both maturing gilts and active sales that you envisage will take place over the following MPC date reference periods (£ billions)? (a)
25th percentile | 50th percentile | 75th percentile | Number of responses | |
|---|---|---|---|---|
From 29 November 22 until September 23 | 73 | 76 | 76 | 51 |
From September 23 until September 24 | 80 | 80 | 90 | 49 |
From September 24 until September 25 | 85 | 90 | 107 | 48 |
From September 25 until September 26 | 53 | 80 | 92 | 47 |
From September 26 until September 27 | 39 | 50 | 80 | 46 |
Footnotes
- (a) Note, respondents were provided with Asset Purchase Facility redemptions (as set out in the run-off profile published in Results and usage data on the Bank’s website) corresponding to each period.
Question 3: Expectations for inflation
3a) Please provide your central expectations for Consumer Prices Index (CPI) inflation at each of the following time horizons. For reference, the most recent CPI print for October was 11.1%.
25th percentile | 50th percentile | 75th percentile | Number of responses | |
|---|---|---|---|---|
Three months ahead | 10.00 | 10.20 | 10.90 | 53 |
Six months ahead | 8.00 | 8.30 | 9.00 | 53 |
One year ahead | 4.59 | 5.50 | 6.20 | 53 |
Two years ahead | 2.05 | 3.00 | 3.75 | 51 |
Three years ahead | 2.00 | 2.00 | 3.00 | 49 |
Five years ahead | 2.00 | 2.00 | 2.80 | 49 |
3b) With reference to your answers to part 3a, how would you describe the balance of risks surrounding your expectations for CPI inflation at the following horizons?
Between now and the one-year point | At the two-year point | At the three-year point | At the five-year point | |
|---|---|---|---|---|
Risks skewed towards a higher path for CPI | 20 | 15 | 15 | 12 |
Risks to CPI path broadly balanced | 22 | 18 | 23 | 26 |
Risks skewed towards a lower path for CPI | 9 | 16 | 11 | 10 |
3c) In formulating your central expectations for CPI inflation and associated balance of risks in 3a and 3b, of the options below, what underlying assumption around Bank Rate is your forecast for CPI inflation conditioned upon?
Count | |
|---|---|
Bank rate to remain at the current level throughout | 1 |
The current markets rate curve | 7 |
Your central expectation for Bank Rate as outlined in 1a | 41 |
Other | 2 |
Question 4: Expectations for gilt yields
4a) What is your central expectation for the 10-year gilt yield at the following points in the future (%)? 10-year gilt yield was 3.10% at 5pm on 29 November 2022.
25th percentile | 50th percentile | 75th percentile | Number of responses | |
|---|---|---|---|---|
End-December 2022 | 3.10 | 3.25 | 3.30 | 49 |
End-March 2023 | 3.11 | 3.35 | 3.58 | 50 |
End-June 2023 | 3.00 | 3.50 | 3.88 | 50 |
End-September 2023 | 2.80 | 3.50 | 3.95 | 50 |
End-December 2023 | 2.70 | 3.00 | 4.00 | 49 |
Question 5: Expectations for exchange rates
5a) What is your central expectation for GBPUSD at the following points in the future? The level of GBPUSD as of 5pm on 29 November 2022 was 1.1994.
25th percentile | 50th percentile | 75th percentile | Number of responses | |
|---|---|---|---|---|
End-December 2022 | 1.1800 | 1.2000 | 1.2025 | 43 |
End-June 2023 | 1.1500 | 1.2000 | 1.2500 | 42 |
End-December 2023 | 1.1418 | 1.2000 | 1.2500 | 42 |
5b) What is your central expectation for EURGBP at the following points in the future? The level of EURGBP as of 5pm on 29 November 2022 was 0.8634.
25th percentile | 50th percentile | 75th percentile | Number of responses | |
|---|---|---|---|---|
End-December 2022 | 0.8500 | 0.8600 | 0.8700 | 42 |
End-June 2023 | 0.8500 | 0.8600 | 0.8750 | 42 |
End-December 2023 | 0.8400 | 0.8600 | 0.8800 | 42 |
Question 6: Expectations for growth
6a) In the key MPC judgements underlying the November 2022 Monetary Policy Report (MPR) projections it was observed that ‘the UK economy is expected to remain in recession throughout 2023 and 2024 H1, and GDP is expected to recover only gradually thereafter’. How would you characterise the profile of the economy you were assuming in formulating your central expectations for Bank Rate in 1a and CPI inflation in 3a in comparison to the assessment in the MPR?
Count | |
|---|---|
More optimistic on the economy relative to this MPC key judgement | 24 |
More or less in line with the assessment in the MPCs key judgement | 29 |
More pessimistic on the economy relative to this MPC key judgement | 3 |
Throughout, the Xth percentile is calculated by ranking the survey responses in ascending order and reporting the response which is ranked in position k where k is (X/100)*(sample size – 1) + 1. For numeric answers, where k is not an integer (ie this position lies between two responses), the result is interpolated by applying the percentile proportional to the distance between them. Discontinuous answers, such as policy meeting dates, are not interpolated. Instead, the first response which covers at least X% of the sample is reported.