Modest Word of Caution over Interest Rates: Comment from WorldFirst

Edward Hardy, economist at WorldFirst, comments:

The Bank’s decision to hold policy unchanged today will have surprised no one. With interest rates lying at historic lows for over a year, very few companies are considering how they’d restructure or reformat their business in a rising rates environment.

The Bank of England is attempting to issue a modest word of caution: interest rates may have to rise at a faster pace than the market currently assumes.

For SMEs, this is a thinly-veiled message suggesting that they need to keep a watchful eye over their finances. Generous loan terms or credit facilities may not be generous for much longer. With inflation close to topping 3%, this is a theme that will surely be tested in the coming months.”

Author: Dylan Jones

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