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Bank of England raises rates to 4.25%

Markets expect future conditions to warrant one more hike

23 March 2023

Citing that the UK economy will now swerve around a recession but that inflation still remains the key risk to the economy, the Bank of England (BoE) raised rates for the eleventh consecutive time today. With the committee voting seven (raise) to two (hold) in favour of a 25 bps hike to bring UK base rates to 4.25%, the UK monetary policy decision makers see inflation falling faster than they previously thought (despite yesterday’s CPI numbers going in the opposite direction) and growth picking up faster – warranting this hike today. Echoing the Federal Reserve’s language, the BoE is open to further hikes if conditions warrant it – a good way to say it is on top of things. Markets are however calling its bluff, expecting future conditions to warrant just one more hike.

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Charles Hepworth

Investment Director
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