Page 22 - SA Chamber UK - September Newsletter- eBook

MEMBER FOCUS: BARCLAYS

INTERNATIONAL BANKING

Bank of England stops hiking

In big news for the UK, the Bank of England opted against a 15th consecutive rate rise. Find
out what’s behind the decision, in our latest article.

Please note: The article does not constitute advice or any form of investment
recommendation. All numbers quoted were sourced from Bloomberg data as at Thursday
21 September 2023. Past performance is never a guarantee of future performance.

The Bank of England (BoE) has broken with recent tradition by deciding not to increase the
base rase at its latest Monetary Policy Committee (MPC) meeting. Despite ongoing inflation
challenges, the central bank opted to keep the rate at 5.25%.

As a result, it closes the chapter on an historic period of interest rate rises, featuring 14
uninterrupted hikes. The decision to take a breather will be welcome news for borrowers,
many of whom have felt the pinch as lending costs soared.

Despite the good news, it’s too early to declare the inflation battle to be over, or to dismiss that
worse may yet be to come. The risk of a recession is one of the reasons why the BoE wanted
to break the hiking cycle, for fear that the UK economy might not weather further strain.

Has inflation peaked?
Possibly, yes. However, it’s too early to say for sure.

In the run-up to the MPC meeting, UK inflation was reported to have fallen more sharply
than many anticipated. Despite global oil prices rising, which are normally a catalyst for

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SA CHAMBER UK NEWSLETTER SEPTEMBER 2023