Hannah Audino, economist at PwC UK says,
"After months of markets expecting a rise in rates, the emergence of the Omicron variant shifted expectations back towards a hold on rates. But in today’s meeting, the Bank of England surprised markets by voting to raise interest rates for the first time in three years by 0.15bp, with just one member of the MPC voting to keep rates on hold.
"While the labour market appears to have been resilient to the end of the furlough scheme, the latest GDP data suggests the recovery is on rocky ground.
"Given it takes around 12-18 months for the full impact of an increase in rates to be realised in the economy, the Bank judged it necessary to raise rates today in order to maintain price stability in the medium-term.
"But with cases at record levels and expected to continue rising, the risk of further social distancing measures, and signs that business confidence is already weakening, it is likely this modest rate rise could be the first and only one for some time."
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