Markets preparing for higher UK borrowing costs, as focus shifts to BOE’s Super Thursday

Dhwani Mehta FXStreet

Industry experts are urging investors to start preparing for higher UK borrowing costs, even though it might take the Bank of England (BOE) a couple of years to hike the interest rates.

The view comes on the back of the UK’s successful vaccination drive that has super-charged the recovery while the government plans for a full reopening in June look to be on course.

A market measure of price increases climbed to a decade-high last month. Meanwhile, the BOE is widely expected to keep record-low interest rates and 150 billion pounds ($209 billion) of bond-buying this year.

John Wraith, head of UK. and European rates at UBS, said, “in due course, the MPC will raise rates materially faster than is currently priced in, should inflation dynamics require them to do so,” adding that a further material rise in rates in one year “could be imminent.”

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Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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