UK Interest Rate Hikes Loom as Economy Defies Expectations

The Bank of England is expected to raise interest rates as many as four times within the next year, according to City figures. This comes after the UK economy delivered surprise growth in July, with a 0.4 percent increase despite forecasts that growth would grind to a halt.

The central bank is expected to be buoyed by this morning's GDP figures, which saw the UK economy grow by 0.4 per cent in July. Money markets are now pricing in four quarter-point hikes by July next year, which would see the Bank rate rise from 3.75 percent today to 4.75 percent in less than 12 months.

Andrew Bailey is widely tipped to oversee an interest rate hike in November, economists have said, though his Monetary Policy Committee (MPC) is expected to leave rates unchanged when it meets next week. This morning's stronger-than-expected growth makes an interest rate hike before Christmas 'a touch more likely,' according to Wealth Club chief investment strategist Susannah Streeter.