Welcome to our first edition of The Current Account for 2023! We hope you enjoy our latest round-up of the top news from the industry in December.
Headlines from the banking sector this month.
In this edition of The Current Account, we discuss if interest rate rises are coming to an end and the impact that the Big Bang 2.0 proposals are likely to have on the sector this year
Interest rate rises….is the end in sight?
- On 15 December 2022, the Bank of England raised the base rate by 0.5% to 3.5%, the ninth increase since 2021. The BoE's Monetary Policy Committee voted 6-3 to raise the rate in a bid to lower the inflation rates, which hit a 41-year high in October 2022. The next interest rate decision is on Thursday 2 February 2023 where further hikes are expected
- However, some economists are predicting that the BoE could end its programme of rate rises this quarter
- The increase in the base rate seems to be having the desired effect with the top companies in the UK taking on less debt than before, resulting from the increased cost of credit along with tougher lending requirements
- Huw Pill, the chief economist of the Bank of England recently gave a speech on the outlook of the UK monetary policy. He outlined that the UK economy is facing several challenges at the same time and the steps that the Monetary Policy Committee are taking to bring inflation back down in the near future. Experts are forecasting a fall in inflation this year, dependent on factors such as China’s covid policy and the war in Ukraine