Bank hawks put markets on red alert in the face of rising interest rates

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The Bank of England has yet to raise interest rates, but it might seem the case for home hunters: The best mortgage deals evaporate as lenders can see which way the wind is blowing.

Policymakers are gleefully discussing the prospect of a hike that could come the following week – multiple clues and self-proclaimed “signals” led the market to price in a rate hike before it even happened.

If that happens, it would be the first increase since Covid hit and the base rate has been cut to a record low of 0.1 pc.

On Thursday evening, the latest clue came from Huw Pill, the hawkish new chief economist, who said a slight hike was on the agenda.

“I think November is live,” he told the Financial Times, describing a rate hike decision as “finely balanced”.

But while the Monetary Policy Committee plays a game of wills, financial markets have already moved, forecasting a hike to 0.25% on November 4 and further increases to 1% or more by the end of 2022. .

And this has already trickled down to consumers, with banks pricing their loans in financial markets. Banks such as Barclays, NatWest, HSBC and Platform, which is part of the Co-operative Bank, have raised rates on some of the best deals.


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