Markets price in almost no chance of 2019 rate rise

Expectations of a 2019 rate hike from the Bank of England now sit at their lowest ebb so far this year, at under 5%.

The chance of a rate cut in 2019 now sits at 10%, more than the probability assigned to a hike. However markets now think the overwhelming likelihood is no movement in rates this year.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said: "It’s that time of year when April Fools’ gags come out in force, and cash savers may be forgiven for thinking the joke’s on them. Markets are now almost totally discounting the possibility of a 2019 rate hike, whereas just a month ago, it was priced in as a fifty-fifty chance.

"Indeed markets now think it’s more likely we’ll get a rate cut this year than a rate rise, though they are overwhelmingly pricing in the probability that rates will in fact just stay the same.

"The ongoing Brexit drama has of course helped to dash hopes for an interest rate rise, but so have concerns over the global economy. In recent weeks some pretty poor economic data from the Eurozone, combined with a dose of caution from the US central bank, have dampened expectations for global growth, and so for potential interest rate rises too."