Home Business News No turtle dove this Christmas as a ‘minority of MPC members voted to raise rates’

No turtle dove this Christmas as a ‘minority of MPC members voted to raise rates’

by LLB Finance Reporter
14th Dec 23 1:13 pm

Just a “minority of MPC members” voted for the Bank of England to hold interest rate 5.25% for the third time in a row.

The MPC voted 6 to 3 to hold rates steady, with dissenters preferring to raise rates by 0.25% to 5.5%

Inflation is now expected to return to 2% by the end of 2025 and the market was expecting rates to remain unchanged prior to the announcement (Trading Economics).

Nicholas Hyett, Investment Manager at Wealth Club, said,“The markets had hoped that Bank Governor Andrew Bailey would put a festive twist on his “sexy turtle” nickname with a dovish set of minutes accompanying the decision to hold rates flat in December.

“But there’s no “sexy turtle dove” in the pear tree this Christmas.

“A minority of MPC members voted to raise rates again, despite a slowdown in economic growth and weakening labour markets, with the minutes flagging geopolitical risks and potential for further wage growth.

“Government bond yields have ticked up and the UK stock market has slipped as a result.

“There’s logic to holding rates steady at the moment – central banks have a history of folding under the economic pressure and declaring victory on inflation too early.

“But, as we have said before, leave rate cuts too long and there’s a risk the interest rate cure becomes worse than the inflationary disease.”

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