The Bank of England lifted its policy rate by 50bps today in line with consensus forecasts, but disappointed markets that saw around a two-thirds chance of a 75bps hike to 2.50% (which was also our forecast). We think the impact of the government’s Growth Plan, with details due tomorrow, will lead to a period of higher core inflation (than previously thought) that should have motivated pre-emptive action from the BoE today with a 75bps hike. The lower-than-expected hike should have depressed UK yields, but the Bank’s announcement that it will begin active gilt sales in early-October as planned (at a pace of ... (full story)