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Highlights
- Around 66% of households believe that over the next three months, the BoE will increase the base interest rate, as per S&P Global.
- In August, this figure stood at 61%, which shows that the expectations of rate hikes are rising.
- Just 5% believe that the BoE will go for a rate cut in its next meeting.
In the next two weeks, the Bank of England (BoE) is expected to take a decision on the interest rate amid the soaring inflationary pressures. The UK households are anticipating that the bank will stick to its hawkish stance and lift the interest rates further.
As per the results of the latest survey conducted by S&P Global, around 66% of households believe that over the next three months, the BoE will increase the base interest rate. In August, this figure stood at 61%, which shows that the expectations of rate hikes are rising.
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The latest figure is the highest since the records started nine years ago. Out of the 1500 households surveyed across the UK, just 5% believe that the BoE will go for a rate cut in its next meeting. Since March this year, the figure hasn’t been this low.
Surging rapidly from 55% in August, the resultant net balance has risen to 61% now, outstripping the 59% peak recorded in May. This indicates that currently, the outlook towards interest rates is the most hawkish on record.
Even though the overall demand is weakening and the UK economy is struggling to grow, the BoE will potentially tighten the monetary policy further to control the growing cost-of-living crisis.
Amid the projections of a further jump in inflation and rate hike expectations, UK investors can explore the following inflation-hedging stocks.
Shell plc (LON: SHEL)
The market cap of the FTSE 100-listed energy firm, Shell plc, stands at £166,606.14m as of 12 September. SHEL shares were trading at GBX 2,317.50, surging by 0.76%, at around 8:15 AM (GMT+1) as the market opened on Monday. With a low P/E ratio of 5.61, the company is presently extending an annual dividend yield of 3.7% to its investors. Shell’s EPS (earning per share) stands at 2.58, and it is providing decent returns of 63.45% and 42.99% to shareholders on an annual and YTD (year-to-date) basis, respectively.
BAE Systems plc (LON: BA.)
The market cap of the FTSE 100-listed aerospace and defence giant, BAE Systems plc, stands at £24,477.56m as of 12 September. BA. shares were trading at GBX 786.80, surging by 0.31%, at around 8:15 AM (GMT+1) as the market opened on Monday. With a P/E ratio of 18.20, the company is presently extending an annual dividend yield of 3.3% to its investors. BAE System’s EPS stands at 0.55, and it is providing decent returns of 42.03% and 43.22% to shareholders on an annual and YTD basis, respectively.
Standard Chartered plc (LON: STAN)
The market cap of the FTSE 100-listed banking group, Standard Chartered plc, stands at £18,011.95m as of 12 September. STAN shares were trading at GBX 625.20, surging by 1.79%, at around 8:30 AM (GMT+1) as the market opened on Monday. With a P/E ratio of 10.62, the company is presently extending an annual dividend yield of 1.8% to its investors. Standard Chartered’s EPS stands at 0.61, and it is providing decent returns of 42.26% and 39.52% to shareholders on an annual and YTD basis, respectively.
Note: The above content constitutes a very preliminary observation or view based on market trends and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.
