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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

You should under no circumstances consider the information and comments provided as an offer or solicitation to invest. This is a macro summary of scheduled news announcements and is not investment advice, independent research or an investment recommendation. The information provided is believed to be accurate at the date the information is produced.

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