Close to the summit, but rates to stay at the peak for a year

Today’s 25 basis point (bps) rise in interest rates from 5.00% to 5.25% may be followed by another hike in September to a peak of 5.50%. But rates appear close to the summit. Even so, the Bank’s new guidance that rates will be “sufficiently restrictive for sufficiently long” supports our view that rates will stay at their peak for a year. The next big surprise may be how fast rates fall in late 2024 and 2025.

We’ll be discussing the implications of the Bank’s decision for the economy, the housing market and financial markets in a 20-minute online Drop-In at 3pm BST today. (Register here.)