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BoE POLICY OUTLOOK Via the May QIR/mins combo, the policy makers said that tighter policy vs the current (flat/shallow/) curve implies is needed, but once again there was no explicit view on the timing. Mixed messages seem the norm, Carney went as far to say that Brexit doesn't tie the hands of the MPC, but we think few took him to his word on that. The BoE reckons a 'smoother' Brexit will transmit to quicker rate increases, this one of the more obvious messages. The BoE also noted that the 1st rate increase isn't fully reflected until Q4 2019 (vs Q1 2019 prior) and this looks completely complacent on the risk of an earlier move. The next meeting takes place after the general election, and while not a 'super-meeting', it may remove some of the uncertainty factor, albeit fractionally. The sole hawk, Forbes, stuck to her guns in being the sole hawk (again) - worries about inflation pushed to uncomfortable levels but she remained the lone voice - May also her final meeting. As widely expected the policy-makers downgraded inflation from 1-3 years, most notably in 2 years, to 2.26% (from 2.56% in Feb) - on Pound's rebound with smaller deviation in 1 and 3 year bands. The most interesting takeaway, via the minutes, is modest pay growth near-term will pick up significantly - though Carney later said it wouldn't be particularly fast. All told, our baseline view is that the UK 10-year yield won't hang about for clearer guidance, or Brexit, or the ECB for that matter and once the tightening process begins, the BoE may have fallen behind the curve (waiting for politics to unravel) hence the long-end should price in a steeper trajectory. We plot a slow, gradual move to 1.5% post election. If a shock no Tory majority, 1.7-2% on too much fiscal expansion. Other metrrics, unemployment will fall further to 4.6% in 2 years, 2018-19 GDP f/c revised up. Alvin Baker

BANK RATE 0.25%, LAST MOVE -25 BP AUG 2016, NEXT MEET JUN 15 2017

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