Have interest rates finally peaked?

Markets expected another interest rate rise today of 50 basis points. That’s exactly what they got. This afternoon the Bank of England has announced its tenth rate rise in a row, from 3.5 per cent to 4 per cent. 

The Monetary Policy Committee (MPC) voted 7-2 to raise rates to 4 per cent; two members voted to hold the bank rate at 3.5 per cent, exposing the dovish leaning that has been a feature of the MPC during the pandemic years. This created a credibility issue for the Bank, as it failed to act on inflation for so long, putting itself in a position of having to play catch-up with rates. 

However, no member voted for a hike bigger than 50 basis points this time round, which suggests that sense of urgency to play catch-up has been (somewhat) lifted. The question now will be whether we get another hike to meet market expectation for one more quarter-point rate rise.