The UK's hawkish monetary policy signals an aggressive pace of rate hikes, with the MPC expecting further increases in March and May, followed by another hike in H2. The BoE also announced the start of quantitative tightening, with plans to sell both gilts and corporate bonds by mid-2022. However, the impact of asset sales is expected to be limited. The MPC voted 5-4 to raise Bank Rate from 0.25% to 0.5%, with dissenters preferring a larger increase of 50bps. The MPC's aim is to reduce its £20bn stock of corporate bonds via a programme of asset sales that will be completed by the end of 2023 at the earliest. The MPC's concerns about a tight labor market causing sustained high inflation have been based on feedback from the BoE's regional agents and its Decision Maker Panel.
