Bank of England
Bank of England
11/08/2024 | Press release | Distributed by Public on 11/08/2024 06:10
Market Participants Survey results - November 2024
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 [email protected] for queries or for further information.
Survey results
The survey was open from 23-25 October 2024 with responses being received from 72 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 or 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? (a)
|
25th percentile |
50th percentile |
75th percentile |
Number of responses |
|
|
7 November 2024 MPC |
4.75 |
4.75 |
4.75 |
72 |
|
19 December 2024 MPC |
4.50 |
4.50 |
4.75 |
72 |
|
6 February 2025 MPC |
4.25 |
4.25 |
4.50 |
72 |
|
20 March 2025 MPC |
4.00 |
4.25 |
4.50 |
72 |
|
8 May 2025 MPC |
3.75 |
4.00 |
4.25 |
72 |
|
19 June 2025 MPC |
3.75 |
4.00 |
4.06 |
72 |
|
7 August 2025 MPC |
3.50 |
3.75 |
4.00 |
72 |
|
18 September 2025 MPC |
3.50 |
3.50 |
4.00 |
72 |
|
One year ahead (November 2025 MPC) |
3.25 |
3.50 |
3.75 |
72 |
|
End-2025 Q4 |
3.25 |
3.50 |
3.63 |
71 |
|
End-2026 Q1 |
3.00 |
3.25 |
3.50 |
69 |
|
End-2026 Q2 |
3.00 |
3.25 |
3.50 |
68 |
|
Two years ahead (November 2026) |
3.00 |
3.25 |
3.56 |
68 |
|
Three years ahead (November 2027) |
3.00 |
3.50 |
3.75 |
67 |
|
Five years ahead (November 2029) |
3.00 |
3.38 |
3.94 |
66 |
Footnotes
- (a) Numbers in the above table are rounded to two decimal places.
1b) 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)? (a)
|
25th percentile |
50th percentile |
75th percentile |
Number of responses |
|
3.00 |
3.25 |
3.50 |
71 |
Footnotes
- (a) Numbers in the above table are rounded to two decimal places.
1ci) Please indicate the percentage probability that you attach to Bank Rate being at the following levels after the November 2024 meeting. Responses should sum to a total of 100%. (a)
|
Mean probability (%) |
|
|
4.25% |
0.6 |
|
4.50% |
10.4 |
|
4.75% |
79.1 |
|
5.00% |
9.6 |
|
5.25% |
0.2 |
Footnotes
- (a) In the question provided to respondents, the different Bank Rate outcomes spanned <3.75% and >6.25% at the extremes, and all 25 basis point increments in between. Results were truncated where the mean probabilities above or below a certain outcome were zero. Mean probabilities are rounded to one decimal place. 69 respondents answered this question.
1cii) Please indicate the percentage probability that you attach to Bank Rate being at the following levels after the December 2024 meeting. Responses should sum to a total of 100%. (a)
|
Mean probability (%) |
|
|
<4.25% |
1.2 |
|
4.25% |
7.4 |
|
4.50% |
47.0 |
|
4.75% |
40.4 |
|
5.00% |
3.8 |
|
>5.00% |
0.3 |
Footnotes
- (a) In the question provided to respondents, the different Bank Rate outcomes spanned <3.75% and >6.25% at the extremes, and all 25 basis point increments in between. Results have been aggregated where the mean probabilities above or below a certain outcome were close to or at zero. Mean probabilities are rounded to one decimal place. 69 respondents answered this question.
1d) Please indicate the percentage probability that you attach to Bank Rate being at the following level at the one year point. Responses should sum to a total of 100%. (a)
|
Mean probability (%) |
|
|
Your 'most likely' expectation plus more than 50 basis points |
7.5 |
|
Your 'most likely' expectation plus 50 basis points or less |
19.8 |
|
Your 'most likely' expectation |
47.3 |
|
Your 'most likely' expectation - 50 basis points or less |
19.2 |
|
Your 'most likely' expectation - more than 50 basis points |
6.3 |
Footnotes
- (a) Mean weightings are rounded to one decimal place. 70 respondents answered this question.
1e) Please weight the following factors (%) in terms of their importance in influencing your expectations for the near-term path for Bank Rate. (a)
|
Mean probability (%) |
|
|
Specified indicators of inflation persistence including measures of the underlying tightness of labour market conditions, wage growth and services price inflation |
36.7 |
|
Headline CPI inflation and alternative measures of inflation (eg, survey based measures) |
22.1 |
|
Activity indicators |
13.9 |
|
The MPC's projections and observations on the outlook |
12.9 |
|
Global influences |
13.0 |
|
Other |
1.4 |
Footnotes
- (a) Mean probabilities are rounded to one decimal place. 68 respondents answered this question.
Question 2: Macroeconomic outlook
2a) Please provide the annual rate of CPI inflation - conditioned on your Bank Rate expectations (question 1a) - that you see as most likely at each of the following time horizons. (a)
|
25th percentile |
50th percentile |
75th percentile |
Number of responses |
|
|
End-2024 Q4 |
2.00 |
2.30 |
2.40 |
66 |
|
End-2025 Q1 |
2.00 |
2.20 |
2.40 |
65 |
|
End-2025 Q2 |
2.00 |
2.20 |
2.50 |
65 |
|
End-2025 Q3 |
2.00 |
2.20 |
2.50 |
65 |
|
One year ahead |
2.00 |
2.20 |
2.40 |
66 |
|
Two years ahead |
2.00 |
2.10 |
2.30 |
63 |
|
Three years ahead |
2.00 |
2.00 |
2.50 |
60 |
|
Five years ahead |
2.00 |
2.00 |
2.40 |
59 |
Footnotes
- (a) Numbers in the above table are rounded to two decimal places.
2b) In the September Monetary Policy Summary, the MPC set out how its decisions have been guided by the need to squeeze persistent inflationary pressures out of the system and by the consideration of a range of cases, to which different probabilities and different risks can be attached. With this framework in mind, what weightings would you attach to each of the outlined cases being realised? Responses should sum to a total of 100%. (a)
|
Mean probability (%) |
|
|
First case: the unwinding of global shocks to headline inflation should continue to feed through to weaker pay and price-setting dynamics (more benign) |
39.3 |
|
Second case: a period of economic slack may be required in order for pay and price-setting dynamics to normalise fully (intermediate) |
34.9 |
|
Third case: the economy may be subject to structural shifts such as changes in wage and price-setting, following recent supply shocks (least benign) |
25.7 |
Footnotes
- (a) Mean weightings are rounded to one decimal place. 69 respondents answered this question.
2ci) In a world where the first case is accepted by all as playing out, how would you adjust your most likely expectations for Bank Rate and the annual rate of CPI inflation one year ahead? Please provide the change in +/- percentage points. (a)
|
25th percentile |
50th percentile |
75th percentile |
Number of responses |
|
|
Bank Rate |
-0.50 |
-0.25 |
0.00 |
65 |
|
Annual rate CPI |
-0.40 |
-0.20 |
0.00 |
61 |
Footnotes
- (a) Numbers in the above table are rounded to two decimal places.
2cii) In a world where the second case is accepted by all as playing out, how would you adjust your most likely expectations for Bank Rate and the annual rate of CPI inflation one year ahead? Please provide the change in +/- percentage points. (a)
|
25th percentile |
50th percentile |
75th percentile |
Number of responses |
|
|
Bank Rate |
0.00 |
0.00 |
0.25 |
65 |
|
Annual rate CPI |
-0.10 |
0.00 |
0.20 |
61 |
Footnotes
- (a) Numbers in the above table are rounded to two decimal places.
2ciii) In a world where the third case is accepted by all as playing out, how would you adjust your most likely expectations for Bank Rate and the annual rate of CPI inflation one year ahead? Please provide the change in +/- percentage points. (a)
|
25th percentile |
50th percentile |
75th percentile |
Number of responses |
|
|
Bank Rate |
0.50 |
0.50 |
0.75 |
65 |
|
Annual rate CPI |
0.20 |
0.30 |
0.60 |
61 |
Footnotes
- (a) Numbers in the above table are rounded to two decimal places.
2di) Please assign probabilities to the following rates of annual CPI inflation three years ahead. Responses should sum to a total of 100%. (a)
|
Mean probability (%) |
|
|
<=1.00% |
3.1 |
|
1.01%-1.40% |
3.9 |
|
1.41%-1.80% |
11.7 |
|
1.81%-2.20% |
35.5 |
|
2.21%-2.60% |
25.8 |
|
2.61%-3.00% |
12.1 |
|
>3.00% |
8.0 |
Footnotes
- (a) Numbers in the above table are rounded to one decimal places. 66 respondents answered this question.
2dii) Please assign probabilities to the following rates of annual CPI inflation on average from five years ahead to ten years ahead (ie analogous to the five-year, five-year forward rate). Responses should sum to a total of 100%. (a)
|
Mean probability (%) |
|
|
<=1.00% |
2.3 |
|
1.01%-1.40% |
3.5 |
|
1.41%-1.80% |
10.4 |
|
1.81%-2.20% |
34.7 |
|
2.21%-2.60% |
27.1 |
|
2.61%-3.00% |
14.2 |
|
>3.00% |
7.7 |
Footnotes
- (a) Numbers in the above table are rounded to one decimal places. 64 respondents answered this question.
2e) Please provide the annual rate of UK GDP growth - conditioned on your Bank Rate expectations (question 1a) - that you see as most likely at each of the following time horizons. (a)
|
25th percentile |
50th percentile |
75th percentile |
Number of responses |
|
|
2024 |
1.00 |
1.10 |
1.30 |
67 |
|
2025 |
0.95 |
1.25 |
1.50 |
67 |
|
2026 |
1.00 |
1.39 |
1.50 |
64 |
Footnotes
- (a) Numbers in the above table are rounded to two decimal places.
Question 3: Expectations for balance sheet and gilt yields
3a) At its September 2024 meeting the MPC voted to reduce the stock of UK government bonds held for monetary policy purposes by £100 billion over the following 12 months to September 2025, to a total of £558 billion. Please provide the annual reduction in the stock of gilts held in the APF, comprising both maturing gilts and gilt sales in initial purchase proceeds terms, that you see as most likely over the following annual review cycles (£ billion).
|
25th percentile |
50th percentile |
75th percentile |
Number of responses |
|
|
October 2025-September 2026 |
70 |
80 |
100 |
60 |
|
October 2026-September 2027 |
31 |
60 |
81 |
60 |
|
October 2027-September 2028 |
28 |
50 |
75 |
59 |
|
October 2028-September 2029 |
37 |
50 |
75 |
58 |
3bi) What do you expect the DMO's actual annual gilt issuance to be in the 2024-25 financial year?
|
25th percentile |
50th percentile |
75th percentile |
Number of responses |
|
|
2024-25 |
295 |
300 |
304 |
55 |
3bii) What about in the 2025-26 financial year?
|
25th percentile |
50th percentile |
75th percentile |
Number of responses |
|
|
2025-26 |
282 |
300 |
310 |
50 |
3c) What do you see as the most likely level for the 10-year gilt yield at the following points in the future (%)?
|
25th percentile |
50th percentile |
75th percentile |
Number of responses |
|
|
End-December 2024 |
4.00 |
4.00 |
4.20 |
60 |
|
End-June 2025 |
3.75 |
3.85 |
4.00 |
61 |
|
End-December 2025 |
3.50 |
3.75 |
4.15 |
59 |
Question 4: Expectations for exchange rates
4a) What do you see as the most likely level for GBPUSD one year ahead?
|
25th percentile |
50th percentile |
75th percentile |
Number of responses |
|
1.2700 |
1.2970 |
1.3200 |
55 |
4b) What do you see as the most likely level for EURGBP one year ahead?
|
25th percentile |
50th percentile |
75th percentile |
Number of responses |
|
0.8025 |
0.8300 |
0.8400 |
55 |
-
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.
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.
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