22 March 2023 - Market expects BoE to hike again

One of the most telling statistics from the housing market and the effect of fifteen months of rate hikes has been the fall in stamp duty receipts. There has been a 27% fall compared with the same month a year ago. The fall from £1.3 billion in February 2022 to £900 million last month is a product of the severe squeeze that has been placed on household budgets by rising inflation. With real wages continuing to fall there is little prospect of any revival in activity before the end of the year. Following the mayhem caused by the mini budget during Liz Truss’ premiership when home loan rates blew out causing a number of lenders to withdraw mortgage products, the market has calmed down somewhat although it has not yet returned to pre-Truss levels yet. With short term interest rates already at a fourteen year high, borrowers are anxiously awaiting the result of tomorrow’s MPC meeting. It is likely that another twenty-five basis points will be added to the base rate bringing it to 4.25%. Given Andrew Bailey’s penchant for being almost apologetic for the continuation of the tightening of monetary policy, it is hard to predict when the Bank will call a halt. Beyond Currency Market Commentary: Aims to provide deep insights into the political and economic events worldwide that can cause currencies to change and how this can affect your FX Exposure.