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Sterling responds positively to interest rise

David Lamb
interest rates

In the end the Unreliable Boyfriend didn’t need dragging to the altar. This was no shotgun wedding – with the Bank’s rate-setting committee voting as one for a rise. Contributor David Lamb, head of dealing at FEXCO Corporate Payments.

“It was this unanimity, rather than the decision itself, that surprised the market – and gave the Pound an extra lift against both the Dollar and the Euro.”

“Despite the hawkishness of today’s decision, the Committee’s minutes are laced with the caution and caveats we’ve come to expect from the Bank, meaning the prospects of a further rate rise look slim. Today’s rise is likely to be a case of ‘one and done”.

“Though the economy remains fragile, this modest rate rise has been carefully calibrated to rein in the dangerously high levels of consumer borrowing without knocking growth off course.”

“With Britain close to full employment, the Bank will argue that it needed to act to keep a lid on wage inflation. But there is also the unspoken question – ‘if not now, when?’ – and the Bank has answered that, on balance, the time had to be now.”

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