Surprise rise in UK Interest Rates to 4.75%
Interest-Rates / UK Interest Rates Aug 04, 2006 - 09:40 PM GMTBy: Phillipa_Green
An unexpected quarter point rise in interest rates from 4.5pc to 4.75pc rattled the stock market with retailers, exporters and builders bearing the brunt of investors' concerns.
The rise caught the financial markets off guard leading to a surge in interest rate futures to take into account the 0.25% rise.The FTSE 100 fell by by 93.7 points, or 1.6pc, to 5838.4, while the pound jumped a cent to $1.8885.
The rise is likely to impact the highly leveredged housing sector and lead to a slowdown in the coming months. And future rises are not out of the question, as the BOE tries to reign in inflation as it moves well beyond the Inflation target of 2%.
So when will the next rise come ?
The Money Market futures suggest another quarter point jump in November / December, especially if inflation continues to rise over the coming months. With further rises expected during 2007 !
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