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Highlights
- The Bank of England (BoE) will announce its monetary policy meeting outcome today.
- A majority of economists predict that the central bank might hike the bank rates by 25 basis points to 0.5%.
The Bank of England (BoE) will announce the outcome of its monetary policy meeting today. The rising inflation in the country that surged to 5.4% in December 2021, its highest level since March 1992, could be the main focus of the meeting outcome.
Inflation could touch 6% by April 2022 as per a recent forecast by the central bank hence the majority of the economists are of the opinion that the central bank might hike interest rates for the second time in a row to curb some inflationary pressure. A rise in inflation results in a higher cost of living and hard-hitting household finances.
Most economists predict that the central bank might hike the bank rates by 25 basis points to 0.5%, marking the beginning of a quantitative tightening and unwinding of its growth stimulus package.
Stock market investors are keenly waiting for the meeting outcome, which will be announced today around 1200 GMT. The focus will be on the BoE’s new inflation forecasts. The rise in bank rates could lead to some control in inflation and benefit the banking sector.
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Let us look at three FTSE listed banking stocks that could have a positive impact of an expected rate hike:
NatWest Group Plc (LON: NWG)
FTSE100 listed company provides cooperate and retail banking solutions to its clients. The lender recently announced that it plans to redeem its outstanding Trust Preferred Securities (TPS) as TPSs can no longer be included in the bank’s tier 1 capital calculation.
The current scenario of rising interest rates could prove beneficial to the company’s business leading to improvement in net interest margins.
NatWest Group Plc’s last close was at GBX 252.50 on 02 February 2022, with a market cap of £28,424 million.
Standard Chartered Plc (LON: STAN)
The banking solution provider has operations in several countries. It offers retail & commercial banking and wealth management products and services.
The company reported a marginal improvement in net interest income in the third quarter of 2021 amid an improved economic scenario. Its total underlying operating income was £11,383 million in the first nine months of 2021.
Standard Chartered Plc’s last close was at GBX 552 on 02 February 2022, with a market cap of £16,996 million.
Lloyds Banking Group Plc (LON: LLOY)
The company offers a bouquet of banking and financial services. It is one of the largest mortgage lenders in the UK. The lender reported a total income of £11,072 million in the first nine months and a significant improvement in profit after tax at £4,962 million.
The rising bank rate might lead to a slowdown in mortgage lending for the bank. However, higher rates might help to improve the net interest income and margins further.
Lloyds Banking Group Plc’s last close was at GBX 52.86 on 02 February 2022, with a market cap of £37,550 million.
