United Kingdom | New Covid variant undermines case for December hike

Ordinarily, the strength of recent survey evidence would have tilted the balance further toward a rise in Bank Rate next month. But the discovery of a new Covid variant and the resulting market turmoil has thrown that prospect into doubt. It’s too soon to be clear about the health consequences of the new variant. But the latest Covid developments leave us more confident that the MPC will wait until next year before hiking rates.

What you will learn:

• Amid an economic environment buffeted by cost of living pressures and a worsening Covid situation in Europe, a strong set of economic surveys last week had suggested a recovery far from out of steam.
• The positive message from the PMIs was reinforced by November’s CBI surveys for industry and retail. The former showed a balance of +26% for order books, the highest on record
• Last week’s surveys also revealed no sign of inflationary pressures abating.