BoE Tightening Bets Surge to 60bps on Record UK PMI Cost Pressures

Markets now price 60bps of Bank of England tightening by year-end and 70% odds of a June rate hike after flash PMIs revealed record surges in input prices and wages. This follows March CPI accelerating to 3.3-3.8% YoY (core 4.1%, services 5.7%), which initially lifted May hike odds to 78% and boosted two-year gilt yields by 12bps. Sterling has gained versus the dollar amid reaccelerating inflation risks above 3%, pressuring the BoE toward retightening despite recovery concerns. The progression underscores persistent UK cost pressures complicating policy outlook.