As assumed and predicted by analysts, the Bank of England raised the main interest rate by 25 basis points to 0.5%. As a reminder, the British central bank raised interest rates by 15 basis points in December 2021. This is the largest increase in funding costs in 2 years. Overnight indexed swaps are pricing in four plus fractional interest rate hikes by the BOE this year. MPC Sees Inflation Peaking Around 7.25% in April, Vs 5% Previously. MPC Sees 2022 CPI at 5.75%, Vs 3.5% in Nov. Bankers said "modest tightening" is likely in the coming months. The bank plans to fully unwind stock of corporate bond purchases and actively sell gilts when the base rate reaches 1%.

WIRP for the UK. Source: Bloomberg

Strong rally of the pound against the dollar shortly after the publication of the BoE decision. Source: xStation 5
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Morning wrap (07.11.2025)