The British economy has entered a recession, and the market is weak or continues to spread ​​

Market interest rates show that the Bank of England: 8 members agreed to raise interest rates by 50 basis points, and 1 supported a 25 basis point increase in interest rates. The UK is expected to enter a recession in the fourth quarter of 2022, lasting five quarters, with GDP falling by 2.1%. The BoE will tighten more than it did in May, showing rates at 2.4% in Q4 2022, 2.9% in Q4 2023 and 2.4% in Q4 2024 (May forecast: Q4 2022) 1.9%, 2.6% in Q4 2023, 2.2% in Q4 2024).

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The Bank of England is likely to tread cautiously. The impending recession is expected to force more than a million households to choose between heating and buying enough food, according to the National Institute for Economic and Social Research (NIESR), a think-tank. British Prime Minister candidate Sunak said that increased borrowing will put upward pressure on interest rates, which will mean higher mortgage payments for people; the Bank of England took action today, and any future government must control inflation, not exacerbate it; As a candidate for prime minister, I will prioritize tackling inflation, boosting economic growth, and then tax cuts.

The RBA's latest statement could be similar to July's, suggesting further policy tightening in the coming months and could reiterate that "the size and timing of future rate hikes will be determined by future data". All but one of the 23 economists polled believed the RBA raised its key interest rate by 50 basis points to 1.85% for the third straight month. That would bring its combined tightening since May to 175 basis points, the largest rate hike in six months since 1994.

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Sterling looks vulnerable to further losses against the dollar after the Bank of England warned the UK economy could be headed for a recession, with strong US jobs data highlighting the gulf between the US and UK economies. Sterling in particular seems likely to weaken further as the gap between the US and UK widens. A further drop in the pound would negate much of the Bank of England's efforts to rein in inflation, keeping the previously bleak outlook in place. Sterling was down 0.9% at $1.2047 after falling to $1.2004, its lowest level in more than a week.

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Bank of England Governor Bailey: The economic cost of the Russian-Ukrainian conflict will not affect the Bank of England's target of 2% interest rate, today's rate hike of 50 basis points does not mean that we are now heading for a 50 basis point rate hike per meeting As the path moves forward, all tool options will be considered at the September meeting and beyond. But rising energy prices exacerbated the decline in real incomes, causing the outlook to deteriorate sharply again. The UK economy is expected to enter a recession later this year, with the recent mix of high inflation and weak activity a challenging backdrop for monetary policy.

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The U.S. labor market remains tight, and economists do not expect job growth to decelerate significantly this year. Average hourly earnings rose 0.5% in July after rising 0.4% in June. That pushed wages up 5.2% year-on-year. While wage growth appears to have peaked, the pressure remains. It's hard to see the U.S. 2-year and 10-year yield curves not inverting further, as the market will have to reassess the Fed's response to such a strong labor market. Regardless of whether the rate hike in September is 50 or 75 basis points, we believe the market must raise expectations for terminal rates above pricing, at least 4%.