Commentary: Bank of England’s interest rate announcement

Commenting on today’s interest rate announcement from the Bank of England, William Marshall, Chief Investment Officer – Hymans Robertson Investment Services (HRIS) says:

“As with the Federal Reserve last night, the Bank of England (BoE) chose to moderate the pace of interest rate rises to 0.5% this afternoon after a 0.75% rise the previous month. The BoE may have taken encouragement from yesterday’s lower-than-expected inflation data meaning it looks like the UK could have reached peak inflation. Normally a slowing of central bank tightening is positive for assets."

“However, this slowdown from the BoE is predominantly a result of the gloomy outlook it has for the economy. The BoE signposted the move quite heavily beforehand meaning markets had anticipated it and priced it in to markets. It is therefore hard to see UK assets receiving much of an immediate boost.  Nevertheless, from a longer-term perspective, markets are likely to take a more positive view that there are signs that peak inflation may have been reached, as well as a slight improvement to the Bank’s economic growth forecast compared to the previous meeting.”