FIRST RATE RISE IN 10 YEARS?

The last time the Bank rate was raised was in July 2007 when Gordon Brown was Prime Minister, having just taken over from Tony Blair, raising the rate to 5.75%. There was no hint at that time of the impending financial crisis.

Now more than 10 years later, this now unfamiliar move looks set to happen again but raising the Bank rate from 0.25% to 0.50%, should the MPC so decide this week, won’t cause too much concern as it has been widely flagged for some time. Indeed, should the MPC decide not to move the Bank rate, despite the major hints that they will, markets may become a little peeved that once again the Bank has not followed through with its forward guidance.

Inflation being where it is means that a hike is probably justified but the jury is still out on the UK economy. The most important aspect of a hike in rates is one of perception that UK interest rates are back on an upward path, albeit a gradual one.

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    February 8, 2018

    Bank of England’s Monetary Policy Committee (MPC) today left Bank Rate and QE unchanged, as widely if not universally expected. What was unexpected was the latest “forward guidance” that the next rate increase is likely to happen sooner than later … Continue reading

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