Valuation Commentary

OCTOBER 2023

The Bank of England (BoE) agreed to hold rates at 5.25% at the most recent Monetary Policy Committee meeting, which was a surprise for many. While the economic data is changing and we are starting to see the impacts of recent rate rises, inflation still has a way to fall before it hits the BoE’s 2% target.

So where does this leave us? We continue our thoughts that the UK will enter recession as a by-product of restrictive monetary policy. It seems likely that we’ll see interest rates remain around current levels for the next six months or so, it is a similar situation across the Atlantic in the US.

We remain positive towards short-dated government debt, but the next move for us will be to consider what we do in the upcoming stage in the cycle, and how (and when) we reposition portfolios once we are in a lower rate environment.

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