What financial markets are telling us about interest rates

After 14 consecutive hikes, the Bank of England base rate has soared from 0.1 per cent in December 2021 to 5.25 per cent. Interest rates are big news. 

But though the base rate makes headlines, it only affects a very narrow set of financial institutions. For monetary policy to work, the Bank of England has to rely on financial markets to pass changes in the base rate on to firms and households.