Please find below our Investment Market Update as at 23rd June 2023.
The focus this week is purely on the UK after yesterday’s announcement by the Bank of England (BoE).
Here’s the agenda for this week:
- It’s hot out there and it is getting hotter!
- Recession is now looming!
- Why higher rates haven’t yet worked
- The catalyst for the rise
- Will these rate rises work?
- What risks are unfolding?
It’s hot out there and it is getting hotter!
I’m not referring to the weather but the surprise increase in interest rates that was announced yesterday and the expectations that interest rates could rise to 6% and beyond. Quite incredible when we think back to December 2021 when the bank base rate was 0.1%!
A quote I read this week captured the essence of what is going on. “It’s hard not to reach for the cold tap when you are in scalding hot water”. I can’t remember where I saw this, but the relevance is obvious in that the scalding hot water is inflation and the cold tap being interest rate hikes.
The cold tap was turned on firmly yesterday by the BoE with a 0.5% increase in the bank base rate. The thirteenth continuous rate rise. Of course, the extent of the rate rise, and likely momentum has implications for some mortgage holders, businesses, and the economy.
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Please Note: This communication should not be read as giving specific advice regarding your personal circumstances. This would only be given following detailed assessment of your individual needs. The value of investments may fall as well as rise; you may get back less than invested. Past performance is not necessarily a guide to future returns.