BoE hike 75bp, but how much more to go?

Published  03 November 2022
   1 min read

Commenting on The Bank of England interest rate, Melanie Baker, senior economist at Royal London Asset Management said:

"The MPC (Monetary Policy Committee) signalled that more interest rate rises were likely but that they felt the peak priced in by markets was too high.  They were not entirely clear exactly which figure they were referring to as the market ‘peak’ in this context though.

"Despite another set of grim forecasts for the real economy, including for the unemployment rate, they hiked 75bp today. It is clear that their focus remains inflation. They see risks to their inflation forecasts as skewed to the upside and this appears to be an important element of their thinking. 

"Interest rate hikes, in an effort to lower inflation, are worsening the near-term economic outlook. The decision, forecast and minutes today are consistent with downside risk to my forecast peak for UK interest rates at 4.5.  However, with domestically driven inflation pressures still looking relatively strong and fiscal policy uncertain, the skew of risk to my forecasts may change again before the end of the month."

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Established in 1988, Royal London Asset Management (RLAM) is one of the UK's leading fund management companies, providing investment management solutions to both wholesale and institutional clients such as not-for-profit organisations, local authorities and the insurance sector.

RLAM manages £150 billion of assets as at 30 June 2022. It invests in all major asset classes including UK and overseas equities, government bonds, investment grade and high yield corporate bonds, property and cash.

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