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 18–20 January 2023 with responses being received from 59 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 weightings and probabilities are 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 do you see as the most likely level of Bank Rate after the following MPC meetings (%)? Bank Rate is currently at 3.50%.
25th percentile | 50th percentile | 75th percentile | Number of responses | |
|---|---|---|---|---|
2 February 2023 MPC | 4.00 | 4.00 | 4.00 | 59 |
23 March 2023 MPC | 4.25 | 4.25 | 4.25 | 59 |
11 May 2023 MPC | 4.25 | 4.25 | 4.50 | 59 |
22 June 2023 MPC | 4.25 | 4.25 | 4.50 | 59 |
3 August 2023 MPC | 4.25 | 4.25 | 4.50 | 59 |
21 September 2023 MPC | 4.25 | 4.25 | 4.50 | 59 |
2 November 2023 MPC | 4.00 | 4.25 | 4.50 | 58 |
14 December 2023 MPC | 4.00 | 4.25 | 4.50 | 58 |
One year ahead (February 2023 MPC) | 3.75 | 4.00 | 4.50 | 58 |
End-Q1 2024 | 3.50 | 4.00 | 4.38 | 59 |
End-Q2 2024 | 3.00 | 3.75 | 4.19 | 58 |
End-Q3 2024 | 2.63 | 3.50 | 4.00 | 58 |
End-Q4 2024 | 2.50 | 3.25 | 3.75 | 58 |
End-Q1 2025 | 2.50 | 3.00 | 3.50 | 56 |
End-Q1 2026 | 2.50 | 3.00 | 3.50 | 54 |
1bi) 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 a total 100% for each meeting). Bank Rate is currently at 3.50%. (a)
Mean probability (%) | Number of responses | |
|---|---|---|
<3.50% | 0.0 | 58 |
3.50% | 3.1 | 58 |
3.75% | 27.9 | 58 |
4.00% | 61.0 | 58 |
4.25% | 5.9 | 58 |
4.50% | 2.0 | 58 |
4.75% | 0.1 | 58 |
>4.75% | 0.0 | 58 |
Footnotes
1bii) Please indicate the percentage chance that you attach to Bank rate being at the following levels after the upcoming 23 March 2023 meeting (responses should sum to a total 100% for each meeting). (a)
Mean probability (%) | Number of responses | |
|---|---|---|
<3.25% | 0.0 | 58 |
3.25% | 0.1 | 58 |
3.50% | 1.3 | 58 |
3.75% | 6.1 | 58 |
4.00% | 25.5 | 58 |
4.25% | 47.7 | 58 |
4.50% | 17.0 | 58 |
4.75% | 1.8 | 58 |
5.00% | 0.5 | 58 |
>5.00% | 0.0 | 58 |
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 | 4.25 | 4.25 | 4.50 | 56 |
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. 56 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 | 56 |
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 timing was taken from those responses. 56 respondents answered the question this way.
1ciii) Again 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 at any of the following levels. Responses should sum to a total weight of 100%.
Mean probability (%) | Number of responses | |
|---|---|---|
At the current level of 3.50% | 0.8 | 58 |
3.75% | 5.4 | 58 |
4.00% | 18.8 | 58 |
4.25% | 28.0 | 58 |
4.50% | 24.2 | 58 |
4.75% | 11.2 | 58 |
5.00% | 5.9 | 58 |
5.25% | 2.9 | 58 |
>5.25% | 2.7 | 58 |
1civ) Reflecting on your expectations for Bank Rate you’ve entered in 1a, what probability do you attach to an initial Bank Rate cut of any size occurring within 2023?
Mean probability (%) | Number of responses | |
|---|---|---|
Bank Rate cut probability | 27.9 | 57 |
1d) With reference to your answers to 1a on most likely levels 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 | 25 | 8 | 5 |
Risks to Bank Rate path broadly balanced | 26 | 24 | 27 |
Risks skewed towards a lower path for Bank Rate | 8 | 27 | 25 |
1e) And 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 | |
|---|---|---|---|---|
Neutral rate | 2.5 | 3.0 | 3.5 | 56 |
1f) Since the December MaPS response window closed UK short rates have fallen. For example, the one-year one-year forward swap rate has decreased 39 basis points (as of 5pm on 17 January 2023) since 2 December. 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 | |
|---|---|---|
UK specific growth and inflation developments | 22.1 | 58 |
Changing perceptions about the MPC’s reaction function | 7.4 | 58 |
Developments in energy prices | 33.2 | 58 |
Other global factors | 29.9 | 58 |
Market technical factors | 6.6 | 58 |
Other | 0.8 | 58 |
1g) It was noted in the December MPC Minutes that the ‘median MaPS respondent expected Bank Rate to peak at 4.25%’ while ‘the market-implied path for Bank Rate, rose to around 4.75%’. To the extent that the markets curve remains above median expectations, please weight the following factors in terms of their importance in affecting the gap between the Market Participants Survey most likely path for Bank Rate and the market implied path. (Responses should sum to a total weight of 100% across the factors.)
Mean weighting (%) | Number of responses | |
|---|---|---|
Domestic factors skewing the balance of risks to Bank Rate to the upside | 42.1 | 58 |
Global factors skewing the balance of risks to Bank Rate to the upside | 27.2 | 58 |
Market illiquidity/volatility and other technical factors in UK short rates | 24.5 | 58 |
Other | 6.2 | 58 |
Question 2: Expectations for the Bank’s balance sheet
2a) At its September meeting the MPC voted to reduce the stock of UK government bonds held for monetary policy purposes, by £80 billion over the following twelve months (comprising both maturing gilts and gilt sales), to a total of £758 billion. Reflecting on 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? Please note as of 17 January a reduction in the stock of purchased gilts of around £8 billion had taken place leaving the outstanding stock at £830 billion. (a)
25th percentile | 50th percentile | 75th percentile | Number of responses | |
|---|---|---|---|---|
From 18 January 2023 until September 2023 | 65 | 72 | 72 | 52 |
From September 2023 until September 2024 | 80 | 80 | 80 | 52 |
From September 2024 until September 2025 | 80 | 87 | 101 | 52 |
From September 2025 until September 2026 | 60 | 80 | 90 | 50 |
From September 2026 until September 2027 | 39 | 77 | 80 | 48 |
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 the annual rate of CPI inflation – conditioned on your Bank rate expectations (question 1a) – you see as most likely at each of the following time horizons. For reference, the most recent CPI print for December 2022 was 10.5%.
25th percentile | 50th percentile | 75th percentile | Number of responses | |
|---|---|---|---|---|
End-Q1 2023 | 9.00 | 9.50 | 9.73 | 56 |
End-Q2 2023 | 6.68 | 7.00 | 8.00 | 56 |
End-Q3 2023 | 5.00 | 5.70 | 6.50 | 56 |
End-Q4 2023 | 3.38 | 4.00 | 5.00 | 56 |
One year ahead | 3.00 | 3.50 | 4.50 | 56 |
Two years ahead | 2.00 | 2.50 | 3.00 | 54 |
Three years ahead | 2.00 | 2.00 | 2.75 | 51 |
Five years ahead | 2.00 | 2.00 | 2.50 | 50 |
3b) With reference to your answers to part 4a, how would you describe the balance of risks surrounding your expectations for CPI at the following horizons?
Count | ||||
|---|---|---|---|---|
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 | 19 | 13 | 14 | 13 |
Risks to CPI path broadly balanced | 17 | 29 | 29 | 33 |
Risks skewed towards a lower path for CPI | 20 | 14 | 8 | 5 |
3c) In the minutes of the December 2022 meeting, the MPC observed that ‘there had been a material reduction in UK medium-term inflation compensation measures since their peak in March’ while noting that these measures ‘had remained above their average levels of the past decade.’ Focusing on this movement from March, where for instance the five-year two-year inflation swap has fallen 96 basis points (as of 5pm on 17 January 2023), please weight the relative contributions of fundamental economic and market technical factors in terms of their importance in affecting this change in medium-term UK inflation compensation measures.
Mean weighting (%) | Number of responses | |
|---|---|---|
Fundamental | 61.8 | 52 |
Technical | 38.2 | 52 |
What proportion of your assigned weighting to ‘fundamental economic factors’ would you assign to the below sub-factors? Responses should sum to a total weight of 100%.
Mean weighting (%) | Number of responses | |
|---|---|---|
Falling central expectations for inflation | 58.4 | 51 |
The balance of risks on inflation becoming more negative/less positive | 32.4 | 51 |
Other fundamental factors | 9.2 | 51 |
Within the market technical factors category please weight the following sub-factors in terms of their importance in driving these moves. Responses should sum to a total weight of 100%.
Mean weighting (%) | Number of responses | |
|---|---|---|
Supply/demand imbalances specific to the liability driven investment (LDI) crisis | 40.7 | 49 |
Perceptions that longer-term structural LDI hedging needs have reduced | 38.5 | 49 |
Other technical factors | 20.8 | 49 |
Question 4: Expectations for gilt yields
4a) What do you see is the most likely level for the 10-year gilt yield at the following points in the future (%)? Current 10-year gilt yield is 3.32% as of 5pm on 17 January 2023.
25th percentile | 50th percentile | 75th percentile | Number of responses | |
|---|---|---|---|---|
End-March 2023 | 3.25 | 3.40 | 3.50 | 53 |
End-June 2023 | 3.20 | 3.50 | 3.75 | 53 |
End-September 2023 | 3.00 | 3.50 | 3.80 | 53 |
End-December 2023 | 3.00 | 3.25 | 3.75 | 53 |
End-February 2024 | 2.72 | 3.00 | 3.68 | 50 |
4bi) Following the publication of the Office for Budget Responsibility’s Economic and Fiscal Outlook in November 2022, the Debt Management Office (DMO) revised down its planned annual gilt sales in the 2022/23 financial year to £169.5 billion. Reflecting on the remaining issuance to be undertaken by the DMO in the current financial year, what would you expect actual annual gilt sales to be in the 2022/23 financial year?
25th percentile | 50th percentile | 75th percentile | Number of responses | |
|---|---|---|---|---|
Gilt issuance (£ billions) | 165 | 170 | 170 | 46 |
4bii) Noting also that a spring budget will take place on 15 March, what is your expectation for planned annual gilt sales in the 2023/24 financial year?
25th percentile | 50th percentile | 75th percentile | Number of responses | |
|---|---|---|---|---|
Gilt issuance (£ billions) | 193 | 250 | 270 | 46 |
Question 5: Expectations for exchange rates
5a) What do you see is the most likely level for GBPUSD at the following points in the future? The level of GBPUSD as of 5pm on 17 January 2023 was 1.2262.
25th percentile | 50th percentile | 75th percentile | Number of responses | |
|---|---|---|---|---|
End-June 2023 | 1.2000 | 1.2300 | 1.2500 | 48 |
End-December 2023 | 1.1800 | 1.2150 | 1.2550 | 48 |
End-June 2024 | 1.1900 | 1.2000 | 1.2650 | 47 |
5b) What do you see is the most likely level for EURGBP at the following points in the future? The level of EURGBP as of 5pm on 17 January 2023 was 0.8801.
25th percentile | 50th percentile | 75th percentile | Number of responses | |
|---|---|---|---|---|
End-June 2023 | 0.8700 | 0.8800 | 0.8850 | 47 |
End-December 2023 | 0.8700 | 0.8800 | 0.9000 | 47 |
End-June 2024 | 0.8613 | 0.8800 | 0.9000 | 46 |
Question 6: Expectations for growth
6a) In the November 2022 Monetary Policy Report (MPR), the MPC set out its latest projections for inflation and growth. Its baseline projections for four quarter growth in real GDP were published as: 2023 Q4: -1.9%, 2024 Q4: -0.1%, 2025 Q4: +0.7%. How would you characterise the profile of the economy you were assuming in formulating your expectations for Bank Rate in 1a and CPI inflation in 4a in comparison to the assessment in the MPR?
Count | |||
|---|---|---|---|
2023 Q4 | 2024 Q4 | 2025 Q4 | |
More optimistic on the growth relative to the MPR | 34 | 26 | 15 |
More or less in line with the assessment in the MPR | 15 | 17 | 34 |
More pessimistic on the growth relative to the MPR | 7 | 12 | 7 |
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.