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 19–21 October 2022 with responses being received from 45 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 or rank different factors, the mean weighting or ranking 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 2.25%.
25th percentile | 50th percentile | 75th percentile | Number of responses | |
|---|---|---|---|---|
3 November 2022 MPC | 3.00 | 3.00 | 3.00 | 45 |
15 December 2022 MPC | 3.50 | 3.75 | 3.75 | 45 |
2 February 2023 MPC | 4.00 | 4.25 | 4.25 | 45 |
23 March 2023 MPC | 4.25 | 4.25 | 4.50 | 45 |
11 May 2023 MPC | 4.25 | 4.50 | 4.75 | 45 |
22 June 2023 MPC | 4.25 | 4.50 | 4.75 | 44 |
3 August 2023 MPC | 4.19 | 4.50 | 4.75 | 44 |
21 September 2023 MPC | 4.00 | 4.50 | 4.81 | 44 |
One year ahead (November 2023 MPC) | 4.00 | 4.25 | 4.75 | 44 |
Two years ahead (November 2024 MPC) | 3.00 | 3.50 | 4.00 | 42 |
Three years ahead (November 2025 MPC) | 2.38 | 3.00 | 4.00 | 39 |
1bi) What do you see as the peak level for Bank Rate in this cycle? (a)
25th percentile | 50th percentile | 75th percentile | Number of responses |
|---|---|---|---|
4.25 | 4.50 | 4.75 | 45 |
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. All 45 respondents answered the question this way.
1bii) 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 | 45 |
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. All 45 respondents answered the question this way.
1c) 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?
Count | |||
|---|---|---|---|
Out to the one-year point | At the two-year point | At the three-year point | |
Risks skewed towards a higher path for Bank Rate | 27 | 15 | 12 |
Risks to Bank Rate path broadly balanced | 11 | 20 | 17 |
Risks skewed towards a lower path for Bank Rate | 7 | 8 | 12 |
1d) 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 | 42 |
1e) The following two questions ask you to assign probabilities to different Bank Rate outcomes immediately following the November and December MPC meetings. (Responses should sum to a total 100% for each meeting.) Bank Rate is currently at 2.25%.
Footnotes
November: (a)
Mean weighting (%) | Number of responses | |
|---|---|---|
<2.25% | 0.0 | 43 |
2.25% | 0.2 | 43 |
2.50% | 1.7 | 43 |
2.75% | 12.4 | 43 |
3.00% | 53.5 | 43 |
3.25% | 29.9 | 43 |
3.50% | 1.8 | 43 |
3.75% | 0.3 | 43 |
4.00% | 0.1 | 43 |
>4.00% | 0.0 | 43 |
Footnotes
- (a) Note, in the question provided to respondents, the different Bank Rate outcomes spanned <0.00% and >5.00% at the extremes, 0.10%, 0.25% and all 25 basis points increments in between. Results have been aggregated where all outcomes above or below a certain outcome were assigned a mean probability of zero.
December: (a)
Mean weighting (%) | Number of responses | |
|---|---|---|
<2.25% | 0.0 | 43 |
2.25% | 0.1 | 43 |
2.50% | 0.1 | 43 |
2.75% | 0.6 | 43 |
3.00% | 1.9 | 43 |
3.25% | 10.0 | 43 |
3.50% | 32.1 | 43 |
3.75% | 35.3 | 43 |
4.00% | 15.5 | 43 |
4.25% | 4.3 | 43 |
4.50% | 0.4 | 43 |
4.75% | 0.1 | 43 |
>4.75% | 0.0 | 43 |
Footnotes
- (a) Note, in the question provided to respondents, the different Bank Rate outcomes spanned <0.00% and >5.00% at the extremes, 0.10%, 0.25% and all 25 basis points increments in between. Results have been aggregated where all outcomes above or below a certain outcome were assigned a mean probability of zero.
1f) Despite retracing from their peaks, overall UK short rates have increased in recent weeks. For example, the one-year one-year forward swap has increased 238 basis points between the August MPC meeting and 5pm on 18 October. Please weight the following factors (%) in order of importance in affecting this increase in the one-year one-year forward swap rate since August MPC. (Responses should sum to a total weight of 100% across these factors.)
Mean weighting (%) | Number of responses | |
|---|---|---|
Global factors pushing up on the UK inflation outlook | 13.5 | 44 |
The impact of recent fiscal announcements on UK domestic demand | 34.2 | 44 |
Investors requiring a higher premium to invest in UK assets | 20.8 | 44 |
Changing perceptions about the MPC’s reaction function | 14.3 | 44 |
Recent market turbulence, illiquidity and other technical factors in UK short rates | 13.2 | 44 |
Other | 4.0 | 44 |
1g) It was noted in the September MPC Minutes that the market-implied path for Bank Rate ‘continued to be higher than the expectations for Bank Rate of respondents to the MaPS’. 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.)
Factor | Mean weighting (%) | Number of responses |
|---|---|---|
Domestic factors skewing the balance of risks to Bank Rate to the upside | 32.9 | 45 |
Global factors skewing the balance of risks to Bank Rate to the upside | 24.4 | 45 |
Market illiquidity/volatility and other technical factors in UK short rates | 28.6 | 45 |
Other | 14.1 | 45 |
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, by an amount of £80 billion over the next 12 months, comprising both maturing gilts and gilt sales, to a total of £758 billion. It also reaffirmed that, as a matter of course, it would not continue to vote at each meeting on propositions regarding the stock of purchased assets outside a scheduled annual review. The Bank’s Executive has subsequently confirmed that the first gilt sale operation will now take place on 1 November. 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 | |
|---|---|---|---|---|
Until September 2023 | 70 | 80 | 80 | 39 |
From September 2023 until September 2024 | 72 | 80 | 90 | 38 |
From September 2024 until September 2025 | 80 | 90 | 125 | 37 |
From September 2025 until September 2026 | 52 | 80 | 90 | 35 |
From September 2026 until September 2027 | 40 | 79 | 80 | 35 |
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 gilt yields
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 18 October 2022 was 3.95%.
25th percentile | 50th percentile | 75th percentile | Number of responses | |
|---|---|---|---|---|
End-December 2022 | 3.90 | 4.00 | 4.25 | 39 |
End-March 2023 | 3.78 | 4.00 | 4.50 | 39 |
End-June 2023 | 3.68 | 4.00 | 4.50 | 39 |
End-September 2023 | 3.50 | 3.78 | 4.50 | 40 |
End-December 2023 | 3.06 | 3.60 | 4.19 | 38 |
3b) In the latest revision to its financing remit (September 2022) the Debt Management Office (DMO) forecast that it would conduct £193.9 billion of gilt sales over the current fiscal year (2022/23). What is your central expectation for actual gilt issuance by the DMO over this period (2022/23) (£ billions)?
25th percentile | 50th percentile | 75th percentile | Number of responses | |
|---|---|---|---|---|
Gilt issuance (£ billions) | 180 | 194 | 200 | 33 |
Question 4: Expectations for exchange rates
4a) What is your central expectation for GBPUSD at the following points in the future? The level of GBPUSD as of 5pm on 18 October 2022 was 1.1320
25th percentile | 50th percentile | 75th percentile | Number of responses | |
|---|---|---|---|---|
End-December 2022 | 1.0975 | 1.1000 | 1.1375 | 35 |
End-June 2023 | 1.0825 | 1.1150 | 1.1500 | 34 |
End-December 2023 | 1.1000 | 1.1500 | 1.2000 | 34 |
4b) What is your central expectation for EURGBP at the following points in the future? The level of EURGBP as of 5pm on 18 October 2022 was 0.8708.
25th percentile | 50th percentile | 75th percentile | Number of responses | |
|---|---|---|---|---|
End-December 2022 | 0.8700 | 0.8800 | 0.8975 | 34 |
End-June 2023 | 0.8625 | 0.8785 | 0.9000 | 34 |
End-December 2023 | 0.8525 | 0.8785 | 0.9075 | 34 |
Question 5: Expectations for growth
5a) In the August Monetary Policy Report, the MPC set out its latest projections for inflation and growth. Its baseline projections for four-quarter growth in real gross domestic product (GDP) were published as below:
Date | GDP (four-quarter growth) (%) |
|---|---|
2022 Q4 | 0.1 |
2023 Q4 | -1.2 |
2024 Q4 | 0.1 |
What are your expectations for the four-quarter growth rates in real GDP over matching periods?
25th percentile | 50th percentile | 75th percentile | Number of responses | |
|---|---|---|---|---|
2022 Q4 | -0.1 | 0.0 | 0.1 | 37 |
2023 Q4 | -1.5 | -1.2 | -0.6 | 39 |
2024 Q4 | 0.0 | 0.3 | 0.5 | 37 |
Question 6: Expectations for inflation
6a) Please provide your central expectations for annual consumer prices index (CPI) inflation after each of the following time intervals. For reference, the most recent CPI print, for September, was 10.1%.
25th percentile | 50th percentile | 75th percentile | Number of responses | |
|---|---|---|---|---|
Three months ahead | 9.68 | 10.00 | 10.50 | 39 |
Six months ahead | 8.00 | 9.05 | 10.00 | 38 |
One year ahead | 5.00 | 6.00 | 7.00 | 38 |
Two years ahead | 2.80 | 3.50 | 4.00 | 37 |
Three years ahead | 2.00 | 3.00 | 3.31 | 36 |
Five years ahead | 2.00 | 2.50 | 3.00 | 36 |
6b) With reference to your answers to part 8a, how would you describe the balance of risks surrounding your expectations for CPI at the following horizons?
Count | ||||
|---|---|---|---|---|
Out to 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 | 26 | 15 | 8 | 11 |
Risks to CPI path broadly balanced | 10 | 19 | 24 | 22 |
Risks skewed towards a lower path for CPI | 2 | 3 | 5 | 4 |
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.