Today, by a majority of 7:2, the Bank of England Monetary Policy Committee (MPC) voted to keep interest rates at a still historic low of 0.50% pa.
Interest rates were increased in November 2017, ths first increase since 2007.
The economy has grown a little faster than expected, albeit still below a 'normally functioning' UK economy. That said, the consumer prices index (CPI) inflation fell from 3.0% pa to 2.7% pa in February 2018, as announced by the Office for National Statistics earlier this week, which we assume prompted the Bank of England Monetary Policy Committee to hold rates for now.
That said, there is still major speculation that rates will rise in late spring/early summer and possikly again at the end of the year with the Bank of England report saying "ongoing tightening" will be needed to return inflation to trend growth of 2% pa.
2018 looks like a volatile year with so many unanswered questions about Brexit, the UK Economy and of course in the US, interest rate rises, trade wars and more.
Guess what the £ did? It strengthened for the last few weeks ahead of interest rate increase speculation.
Guess what the FTSE 100 did? FTSE 100 fell back as FTSE 100 companies earn profits overseas and then convert back into a stronger sterling meaning lower profits.
We believe the market is pricing in future interest rate rises in the UK later this year and imminent US interest rate rises.