Chairman’s Comments: UK Interest Rate Hold
Our Chairman David Atherton gives his thoughts on today’s decision to hold UK interest rate exclusively to our website.
Please see David’s remarks below.
“The Bank of England voted today to keep UK interest rates unchanged this month at 4.75%. This was the widely expected decision although notably three of the nine-person panel voted for a cut. Bank Governor Andrew Bailey would not commit to a timetable of cuts, but he did not suggest any other direction. The next decision is on 6 Feb 2025.
Analysts had predicted an 8-1 vote, so this is seen as future cuts being more likely than they were. The result was a slight uptick in UK stock and bond price markets, and slight drop in the pound, although there were much larger moves the other way yesterday when the US Federal Reserve cut dollar rates by 0.25% to 4.50%, but signalled a slower pace going forward.
As there does not appear to be any change to the trend, the minimal effect on markets shows that this is probably the right decision for now. UK “real” (ie net of inflation) wages also upticked this month, so tt remains to be seen whether our new government will keep a tight cap on inflation, which is the main driver for rate decisions.”
For further information see https://www.bbc.co.uk/news/articles/cd75yq1zlzqo
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