BOE surprise rate hike of 0.5%

The BOE unexpectedly hiked interest rates by a half-point as they ramp up efforts to tame stubbornly high inflation. The move came as a surprise to markets which only priced in a 60% chance of a 0.25% hike. Putting the UK in an even more precarious position, they now remain an outlier with a CPI print four times the 2% target. Key rates are now expected to peak at 6.25% with no rate cuts in sight for 2023. Core inflation and wage growth has continued to show resilience even as the BOE has raised rates to levels not seen since the 90s. Unfortunately, higher borrowing costs will become a further drag on the UK economy with homeowners now struggling with higher mortgage rates as they come up for renewal. In markets, gilt yields edge higher whilst the pound strengthened against the dollar.