Market Participants Survey results – May 2022

1a) What is your central expectation for Bank Rate after the following MPC meetings (%)? Bank Rate is currently at 0.75%.

1b) If not already reflected in your responses to part 1a, what do you see as the peak level for Bank Rate in this cycle? ^(a)

And if not already reflected in your responses to part 1a, after which MPC meeting would you expect this peak to occur (month/year)? ^(a)

1c) 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) (%)?

1d) Please indicate the percentage chance that you attach to Bank Rate being at the following levels at the upcoming 5 May 2022 meeting (responses should sum to 100%). Bank Rate is currently at 0.75%. ^(a)

1e) With reference to your answers to part 1a, how would you describe the balance of risks surrounding your expectations for Bank Rate at the following horizons?

1f) Following the initial reaction to the March MPC meeting, short rates in the UK have continued to increase (eg the 1y1y forward swap rate increased approximately 53 basis points between the March MPC meeting and 20 April close of business). Please weight the following factors (%) in order of importance in affecting this increase in UK short rates. (Responses should sum to a total weight of 100% across these factors.) ^(a)

2a) At the February 2022 MPC meeting, the Committee voted to begin to reduce the stock of UK government bond purchases, financed by the issuance of central bank reserves, by ceasing to reinvest maturing assets. In the Monetary Policy Report it was also stated that ‘The Committee reaffirms that it will consider beginning the process of actively selling UK government bonds only once Bank Rate has risen to at least 1%, depending on economic circumstances at the time’. Reflecting on this, what is your central expectation for the cumulative stock of gilts that the Bank may have actively sold after the following MPC meetings (£ billions)? ^(a)

2b) If not already reflected in your responses to question 2a, after which MPC meeting (month/year) do you first foresee active sales commencing? ^{(a) (b)}

3a) What is your central expectation for the 10-year gilt yield at the following points in the future (%)? The level of the 10-year gilt yield as of 5pm on 20 April 2022 was 1.915%.

3b) What impact (if any) do you think expectations for reductions in the stock of gilt purchases have had on the current level of the 10-year and 30-year gilt yield (basis points)? ^(a)

4a) What is your central expectation for GBPUSD at the following points in the future? The level of GBPUSD as of 5pm on 20 April 2022 was 1.3055.

4b) What is your central expectation for EURGBP at the following points in the future? The level of EURGBP as of 5pm on 20 April 2022 was 0.8317.

5a) Please provide your central expectations for annual CPI inflation after each of the following time intervals. For reference, the most recent CPI print, for March, was 7.0%.

5b) With reference to your answers to part 5a, how would you describe the balance of risks surrounding your expectations for CPI at the following horizons?

5c) (i) The MPC has observed that medium-term UK inflation compensation measures in financial markets had remained above their average levels of the past decade. Please weight the following factors (%) in order of importance in affecting the current level of medium-term UK inflation compensation measures (responses should sum to a total of 100% across the three options).

5c) (ii) What proportion of your assigned weight to ‘higher fundamental perceptions about prospects for inflation’ in part 5c) (i) would you assign to the below factors (responses should sum to a total of no more than 100% across the two options)?