Clarity not confusion: Change of guard at BoE but the same old communication error

Latest meeting surprised markets

While we have a (relatively) new Bank of England (BoE) governor in Andrew Bailey, it seems the Bank is committed to making the same old policy communication errors, with the latest meeting catching the market off-guard causing gilt yields to rise and expectations for rate hikes to be brought forward.

We think the moves are unjustified, though, and have been adding duration into the portfolios on the back of this. The transparent, calm and frankly dull BoE meetings we had become accustomed to over the last 12 months gave way to one of surprise in the latest September meeting. On the face of it, little changed, with interest rates kept at record lows and quantitative easing (QE) set to continue, despite two hawkish members dissenting against this. The key surprise, and what has led to a bout of volatility in gilt markets, came from talk that rate rises are being considered before...