Market Participants Survey results – September 2022

1a) What is your central expectation for Bank Rate after the following MPC meetings (%)? Bank Rate is currently at 1.75%.

1bi) What do you see as the peak level for Bank Rate in this cycle? ^(a)

1bii) At which MPC meeting would you expect this peak to occur (month/year)? ^(a)

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?

1d) 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) (%)?

1e) Please indicate the percentage chance that you attach to Bank Rate being at the following levels after the upcoming 15 September 2022 ^(a) meeting (responses should sum to 100%). Bank Rate is currently at 1.75%. ^(b)

1f) It was noted in the August MPC Minutes that the market-implied path for Bank Rate ‘continued to be higher than the expectations for Bank Rate of respondents to the latest MaPS’. To the extent that you think this remains true, please weight the following factors (%) in terms of their importance in affecting this gap between the Market Participants Survey central path for Bank Rate and the current market-implied path. (Responses should sum to a total weight of 100% across these factors.) ^(a)

2a) In the Minutes of its August 2022 meeting, it was stated that ‘based on the staff’s analysis, the MPC was provisionally minded to commence gilt sales shortly after its September policy meeting, subject to economic and market conditions being judged appropriate and to a confirmatory vote at that meeting’ and that the ‘Committee judged that, over the first twelve months of a sales programme starting in September, a reduction in the stock of purchased gilts held in the APF of around £80 billion was likely to be appropriate’. It further stated that ‘For following years, the MPC intended to set an amount for the reduction in the stock of purchased gilts over the subsequent twelve-month period, as part of an annual review’. Noting this, what is your central expectation for the cumulative reduction in the stock of purchased gilts, comprising both maturing gilts and active sales, to have taken place at the following time horizons (£ billions)?

2b) Again, noting the MPC’s observation in its August 2022 Minutes that it ‘was provisionally minded to commence gilt sales shortly after its September policy meeting’ and that it judged that ‘over the first twelve months of a sales programme starting in September, a reduction in the stock of purchased gilts held in the APF of around £80 billion was likely to be appropriate’: What impact (in basis points) have your expectations for reductions in the stock of purchased gilts (Q2a) had on your central expectation for Bank Rate (Q1a) at the one-year point ie relative to a scenario where you might not have expected any reduction in the stock of gilt purchases? ^(a)

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 31 August 2022 was 2.80%.

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 gilt yield (in basis points)? ^(a)

3c) As previously mentioned, the MPC stated in its August Minutes that ‘the Committee judged that, over the first twelve months of a sales programme starting in September, a reduction in the stock of purchased gilts held in the APF of around £80 billion was likely to be appropriate’. What further impact (if any) on the 10-year yield (in basis points) would you expect the flows associated with such a programme to have were it to be implemented? ^(a)

3d) In the latest revision to its financing remit (April 2022) the Debt Management Office (DMO) forecast that it would conduct £131.5 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)?

4a) What is your central expectation for GBPUSD at the following points in the future? The level of GBPUSD as of 5pm on 31 August 2022 was 1.1643.

4b) What is your central expectation for EURGBP at the following points in the future? The level of EURGBP as of 5pm on 31 August 2022 was 0.8643.

4c) Since the August meeting, sterling has depreciated against a range of currencies, and by 4.29% versus the US dollar. Please weight the following factors (%) in terms of their importance in driving these moves. (Responses should sum to a total weight of 100% across these factors.) ^(a)

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:  

What are your expectations for the four-quarter growth rates in real GDP over matching periods?

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 July, was 10.1%.

6b) With reference to your answers to part 6a, how would you describe the balance of risks surrounding your expectations for CPI at the following horizons?

6c) In the Minutes of the August 2022 meeting, the MPC again observed that ‘medium-term UK inflation compensation measures had remained above their average levels of the past decade’. Since the August meeting, market-based medium-term inflation measures have risen. Please weight the following factors (%) in terms of their importance in affecting this change in medium-term UK inflation compensation measures. (Responses should sum to a total of 100% across the five factors.) ^(a)