Reaction to Bank of England decision (04/11/21)
by Shafiq Shabir
Head of Electronic Trading, Intertrader
It’s fair to say markets have been somewhat blindsided this afternoon as the Bank of England opted to keep interest rates at their current level, in spite of forecasting inflation to reach 5%.
The UK – like the rest of the world – is not yet out of the woods in terms of fully evaluating the impacts of the pandemic. We expect the Bank will take action once global supply chain disruptions have calmed, the impacts of the furlough scheme ending have become clearer and consumer confidence has lifted once more following increases to energy bills and the announcement of tax increases. Before having clarity on these issues, any interest rate rise would have been a premature and potentially counterproductive measure – compounding households’ financial challenges.
Rates will rise. But with a very heavy majority for maintaining them as they are in November, it is not a foregone conclusion they’ll be hiked in December.
Published: 4 November 2021
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