15 December 2022
If you are covering the latest interest rate rise from the Bank of England, please find below a comment from Marcus Brookes, chief investment officer at Quilter Investors:
“Despite it being widely acknowledged that the UK is in recession, the Bank of England has today delivered another interest rate rise as it seeks to tame the inflationary beast. For now the 75bps rise in November looks to have been a one off as today brought an additional 50bps to the bank’s rate. The good news for households and the economy is that it looks like inflation may have peaked, if this week’s stats are anything to judge by. This does not mean the end of the rate hikes though, and just like the Federal Reserve over in America, the BoE will keep hiking until it is sure inflation is on a sustained downward trajectory.
“However, with the political shenanigans seemingly over for now and the market a lot more stable than it was at the last decision, investors will start looking to the future and signs of a pause in the hiking cycle and potentially even look at when rates might even be cut in order to stimulate economic growth. The robust jobs market is the only thing keeping the UK from entering a truly stagflationary environment, but how long this will hold remains to be seen. 2023 has not been primed as a bounce back year for the economy, so the BoE may need to act sooner than it may like.
“It is a tough balancing act, and the BoE will be hoping to learn a lot from the US given they appear a few months ahead of the UK in this battle against inflation.”
