What an interest rate hike in February would mean for markets

Rate rise could bring end to QE

With the UK’s current interest rate at 25bp, brought in amid uncertainty in December, the market is already pricing in a further raise as soon as February, which could formally bring about an end to the UK’s quantitative easing programme while making the Bank of England ‘credible’ again from a communications perspective.

Craig Inches, head of rates and cash at Royal London Asset Management, highlighted that the market is currently 80% priced for a UK interest rate hike to 0.5% in February. Driving forces behind another...