'Any other decision would be a major surprise to markets': Chances of a May rate hike falls to just 8%

Drop of 90 percentage points in one month

The market expectations of an interest rate rise in May has fallen 90 percentage points in one month following weaker-than-expected GDP data, lower inflation and Bank of England governor Mark Carney's comments that it was not a "done deal".

At its February meeting, the Monetary Policy Committee suggested a rate rise would be needed "somewhat earlier" and to a "somewhat greater extent" than anticipated in order to bring inflation back to its 2% target, causing market expectations of a May rate rise to jump 17 percentage points to 67%. More clarity was subsequently provided with regard to Brexit in March, a key issue for the MPC, with Michel Barnier and David Davis announcing both parties had agreed a large part of the transition deal when the UK leaves the bloc on 29 March 2019. These factors led markets to price in a 98% ch...