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The latest updates and articles from Arbuthnot Latham
The Bank of England seems increasingly likely to raise interest rates again next month, in what would be the first back-to-back rate rises since 2004.
Central banks continue to dominate the news, with the Bank of England potentially raising rates again next month, and the US Federal Reserve increasingly likely to start raising rates in March.
As we start the new year, the broader themes that the market will be focussing on over the coming months are the virus, central bank policy, inflation, and economic data.
The Bank of England raised interest rates to 0.25% yesterday, with a vote of 8-1, whilst keeping the QE program unchanged.
A huge week ahead for the markets, with all three major central banks meeting, and a slew of important economic data releases.
Market risk sentiment is being driven by Covid developments as we gradually learn more about the new Omicron variant, which is adding to the uncertain outlook, and leading to increased volatility.
Market focus is very much on the Bank of England and whether they will raise interest rates next month, following the recent run of strong economic data.
The Bank of England look increasingly likely to raise interest rates next month following strong UK data this week.
Bank of England governor Bailey has reiterated the MPC’s focus is the jobs market and said interest rates would rise once higher inflationary expectations fed through to higher wages.
The BOE maintained its benchmark interest rate at 0.10%, with the MPC voting 7-2 in favour of no change.
Market focus is very much on next week’s Bank of England meeting, where they could potentially raise interest rates by an initial 0.15%, as they fight against surging inflationary pressures.
The market has ramped up expectations that the Bank of England will have to raise interest rates far more aggressively than previously thought, driven by the rising inflationary outlook.
Ruth Lea CBE
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