Markets expect future conditions to warrant one more hike
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.
The information in this document is given for information purposes only and does not qualify as investment advice. Opinions and assessments contained in this document may change and reflect the point of view of GAM in the current economic environment. No liability shall be accepted for the accuracy and completeness of the information. Past performance is not an indicator for the current or future development.