With the UK’s current interest rate at 25bp, brought in amid uncertainty in December, the market is already pricing in a further raise as soon as February, which could formally bring about an end to the UK’s quantitative easing programme while making the Bank of England ‘credible’ again from a communications perspective.
Craig Inches, head of rates and cash at Royal London Asset Management, highlighted that the market is currently 80% priced for a UK interest rate hike to 0.5% in February. Driving forces behind another potential interest rate hike include elevated consumer price inflation, which is above 5% and still expected to peak further this year. Given this scenario, "it would seem natural" for the Monetary Policy Committee to increase interest rates again, said Inches. "However with Omicron continuing to rise and no further restrictions from the UK Prime Minister we could see supply chains i...
To continue reading this article...
Join Professional Adviser for free
Signup and gain exclusive members-only insights
- Unlimited access to real-time news, industry insights and market intelligence
- Stay ahead of the curve with spotlights on emerging trends and technologies
- Receive breaking news stories straight to your inbox in the daily newsletters
- Make smart business decisions with the latest developments in regulation, investing retirement and protection
- Members-only access to the editor’s weekly Friday commentary
- Be the first to hear about our events and awards programmes
