3 November 2022
If you are covering the Bank of England’s decision to raise interest rates by 0.75% to 3%, please see the following comment from Richard Carter, head of fixed interest research at Quilter Cheviot:
“Today’s 0.75% Bank of England interest rate hike marks the biggest increase in more than three decades and the eighth consecutive rise as the Bank continues its lengthy battle with inflation.
“Markets had widely anticipated the hefty rate hike, particularly given the Bank has had to make the move prior to the government’s fiscal statement after it was delayed until later this month. However, this latest move is actually significantly lower than it could have been given the furore caused by the mini-budget just a matter of weeks ago. The change of Prime Minister appears to have restored some calm to UK bond markets, and the BoE could take a smaller step as a result.
“The Bank now predicts that inflation will rise to approximately 11% in Q4 2022. Inflation reached a 40-year high of 10.1% in September, meaning we still have a way to go yet. As such, further rate rises are no doubt on the cards in the months ahead, but the pace at which they are increased is likely to slow. Mortgage rates are already reaching increasingly high levels that are fast becoming unaffordable for many, and the prospect of tax increases at the Chancellor’s upcoming Autumn Statement may also put a dampener on future hikes.”
