Commenting on The Bank of England interest rate, Melanie Baker, Senior Economist at Royal London Asset Management said:
“The Committee want to wait until November to fully digest the impact of fiscal changes. The pace of rate increases might plausibly step up then, depending what else is happening in the economy and especially to measures of domestically-driven inflation. Three MPC members did vote for a 75bp rate hike today.
“The decision to raise rates was clearly about inflation. They noted signs of continuing strength in domestically generated inflation and suggested that the energy bill freeze would add to inflationary pressure in the medium term.
“My forecasts assume that this is not the last BoE rate hike in this cycle by any means, with a peak around 3.50% next year and risks skewed to the upside of that projection.”
The views expressed are those of the author at the date of publication unless otherwise indicated, which are subject to change, and is not investment advice.