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| Bank of England Raises Policy Rate, Rabobank Predicts Further Increase to 4.75% if Financial Stability Risks Remain Contained |
The Bank of England has raised its policy rate by 25 basis points to 4.25%, with economists at Rabobank predicting that Bank rate could rise as high as 4.75% if global financial stability risks remain contained. The next 25 basis points hike is forecast for May.
According to Rabobank, the Financial Policy Committee has judged that the UK banking system remains resilient, effectively giving the green light to the rate increase. They also note that the shift to a meeting-by-meeting approach is not as dovish as some expected, suggesting that the Bank of England could tighten policy further in May if price pressures persist and credit conditions permit.
Rabobank economists have held the view that Bank rate could rise as high as 4.75% for some time, with the next 25 basis points hike expected in May. However, they caution that this would require global financial stability risks to remain contained. Investors will be watching closely to see how the situation evolves and what impact it may have on the UK economy and financial markets.
