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An uneasy rate hike

17th March 2022

Commenting on today’s announcement from the Bank of England, Melanie Baker, Senior Economist at Royal London Asset Management said:

Today’s rate rise comes as the outlook for economic activity has weakened. Wage growth continues to run well short of inflation, pressuring real household incomes - and inflation still hasn’t peaked either.

The Monetary Policy Committee flagged that should recent movements in global energy and traded goods prices persist, then that would weigh further on UK real incomes and spending. With high inflation, rising inflation expectations and the recent further fall in the unemployment rate, this looks unlikely to be the last rate rise in this cycle. However, the Monetary Policy Committee’s comments continue to signal that – for now - they don’t envisage raising rates sharply, or even a great deal, further.


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.