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02 August 2018

Interest Rate Rise

The Bank of England have raised interest rates for only the second time since 2008. This rise comes despite the uncertainty surrounding Brexit, inflation being somewhat subdued and wage increases slowing. 
 
Given the perplexing juxtaposition of the data and the fact that rates have increased, it leaves one to surmise that the BOE has other concerns. According to the Office for National Statistics, the level of public borrowing has hit its highest level since the ‘80s, and we are net borrowers, spending more than our incomes. It might just be that the BOE would like us to think twice before taking out more debt.
 
Furthermore, with the US raising rates themselves, the BOE could also be concerned with the downward pressure on the Pound and that a rate rise is needed to stop the Pound falling further and thus bringing with it more of the imported inflation we saw post the Brexit vote. The comments around the rate rise are going to be just as interesting as the rise itself...

James Andrews 
Director - Head of Investment Management 
Interest Rate Rise
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