UK stock market review – market resilient as hopes of a rate peak grow

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We look at what’s happened in the UK economy, how the stock market’s been coping, and how our Wealth Shortlist funds have fared.

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Published on 20 October 2023

It was correct at the time of publishing. Our views and any references to tax, investment and pension rules may have changed since then.

As expectations of tough times ahead for the UK economy linger, last month the Bank of England (BoE) held the base interest rate at 5.25% – the highest level for 15 years.

This was the first time since December 2021 that the BoE’s monetary policy committee, who meet eight times a year, chose to hold rates rather than hiking them. This has raised hopes that we are at or very near the peak, although big cuts aren’t predicted any time soon.

Raising interest rates generally makes it more expensive to borrow money, meaning people have less to spend, reducing demand and inflation. However, the effect works on a time lag rather than having the full effect right away.

Take the housing market as an example. There are lots more consumers in the UK on fixed-rate mortgages than there are on tracker or variable-rate mortgages. This means that