Reaction to Bank of England decision (16/12/21)
by Shafiq Shabir
Head of Electronic Trading, Intertrader
Even the shadow of uncertainty that Omicron has cast over financial markets was not enough to deter the MPC from hiking interest rates today, so strong is the concern about the surging cost of living.
Unsettled by the UK’s decade-high inflation – rising to levels it was not expecting until at least April – the Bank has decided to act. The first of the world’s major central banks to do so, the eight-to-one vote indicates that members felt they could not kick the can down the road into 2022 without conditions deteriorating further.
The question now is how much more action will the Bank need to take next year? And what do rising interest rates mean for businesses that have taken on significant debt to get through the pandemic? As far as we’re concerned, this marks somewhat of a watershed moment for the MPC, and we expect further rate rises to take place in 2022.
Published: 16 December 2021
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