Bank hawks put markets on red alert in the face of rising interest rates

The Bank of England has yet to raise interest rates, but it might seem the case for home hunters: The best mortgage deals are evaporating as lenders can see which way the wind is blowing.

Policymakers are gleefully discussing the prospect of a hike that could come the following week – multiple clues and self-proclaimed “signals” led the market to price in a rate hike before it even happened.

If that happens, it would be the first increase since Covid hit and the base rate has been cut to a record low of 0.1 pc.

On Thursday evening, the latest clue came from Huw Pill, the hawkish new chief economist, who said a slight hike was on the agenda.

“I think November is live,” he told the Financial Times, describing a rate hike decision as “finely balanced”.

But while the Monetary Policy Committee plays a game of wills, financial markets have already moved, forecasting a hike to 0.25% on November 4 and further increases to 1% or more by the end of 2022. .

And this has already trickled down to consumers, with banks pricing their loans in financial markets. Banks such as Barclays, NatWest, HSBC and Platform, which is part of the Co-operative Bank, have raised rates on some of the best deals.

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