We use cookies on our website to enhance your browsing experience. By continuing to use this site without changing your settings you consent to our use of cookies in accordance with our cookie policy. To learn more about cookies, how we use them on our site and how to change your cookie settings please view our cookie policy.

Close Cookie Bar

What have we been up to


Donec varius pellentesque metus, at vehicula magna egestas quis. Sed purus ipsum, vehicula id libero laoreet, posuere ornare urna. In eu nulla leo. Nullam pellentesque dolor nec scelerisque consequat.

Bank of England raises by 25 basis points

Share on Linkedin
+ -
If you thought this page is useful to your friend, use this form to send.
Friend Email
Enter your message

For the first time since July 2007, the Bank of England has raised Bank Rate by 25 basis points today in a widely-expected move. The MPC voted 7-2 in favour of the hike. The question now is whether this move was merely a response to the last 25 basis point cut in August 2016 – now regarded as a mistake – or whether today’s increase presages further moves on the way to interest rate ‘normalisation’. Initial market reaction has been a classic ‘buy on rumour, sell on fact’ with 3 and 5 year swap rates down 3 and 4 basis points respectively. On the FX front, after an initial rally to 1.3273, GBP/USD has traded down over a cent to 1.3105, while GBP/EUR has also lost a cent to 1.1245. It seems everyone had bought sterling in advance and there were only sellers after the announcement.

Mark Carney will doubtless shortly be explaining at the press conference how the MPC is not about to embark on a sharp tightening process but one of very gradual normalisation with a peak in rates that will be much lower than ion previous cycles. This guidance will be important to reassure markets and overstretched consumers who continue to face declining real earnings. However, the reality is that the future path of interest rates will be, as always, data-dependent. If the recent blip in inflation does indeed turn out to be entirely due to sterling’s post-referendum weakness, all will be well. If, on the other hand, the consensus is wrong and the UK’s rising inflation turns out to be more cyclical in nature and part of a general ending of the global deflationary forces in place since 2008, then the market could yet be surprised by how far rates rise over the next couple of years.



Markets confident about May, relieved about Macron

25thApril 2017

Theresa May’s shock announcement of a snap election last week sent sterling sharply higher as markets judged that a...

read more

How is this bull market going to end?

30thNovember 2017

Back in October, I had the pleasure of commenting on the outcome of the German election and its wider implications for Europe...

read more

How can we help you

Have you got a question about how you hedge your financial risks, or structure and arrange your debt?

Find out how we can help you by contacting us today.


contact us

Stay Connected

Would you like news and views on local and global financial markets?

Sign up today to receive news straight to your inbox.

By providing your email address you agree to receive marketing emails from JCRA. We won’t ever spam you. See our privacy policy.