Bank of England hold interest rates at 0.5%


Bank of England hold interest rates at 0.5%

In November 2017, when the Bank of England raised interest rates for the first time in over 10 years, it indicated that there could be two further hikes of 0.25% over the next three years. Less than three months later, the rate setting committee apparently now believes that earlier and more frequent increases are needed.

On the back of the news, sterling rose sharply on the currency markets and the yield on the 2-year Gilt jumped to its highest level since late 2015. Is this response justified?

The Bank’s views appear to be predicated on ongoing strength in the global economy fuelling better than expected growth and higher inflation in the UK.

In our assessment, the pace of global economic growth is more likely to moderate than to accelerate in the year ahead and UK inflation pressures are likely to ease gradually. Given a few months, the Bank is likely to change its tune again.

Abi Oladimeji
Chief Investment Officer

Comments first appeared in:

Moneywise (on 8th February 2018)

Fox Business (on 8th February 2018)

Washington Post (on 8th February 2018)

ABC News (on 8th February 2018)

Metro Canada (on 8th February 2018)

Breitbart London (n 8th Februa2018)

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