Bank of England raises rates for first time since 2023, warns more likely - Reuters

The Bank of England has raised interest rates for the first time since 2023, according to Reuters, and signalled that further increases are likely. The move marks a shift in the central bank's stance after a period of holding rates steady, and the accompanying guidance suggests policymakers remain concerned about underlying inflation pressures.

For markets, the decision matters on several fronts. Higher rates raise borrowing costs across mortgages, corporate credit and consumer loans, which can weigh on spending and investment over time. Sterling and UK government bonds typically react quickly to both the rate change and the tone of forward guidance, while rate-sensitive sectors such as housing and utilities tend to draw particular attention. Equity investors often reassess valuations as discount rates shift.

What to watch next: the pace and scale of any additional increases, the Bank's updated inflation assessment, and how financial conditions respond in the weeks ahead. Because the warning of more hikes is itself a signal about the Bank's reaction function, markets may focus as much on future guidance as on the decision itself.