The Bank of England announced another 25bps hike in its benchmark interest rate, taking it to 4.25% in its latest monetary policy decision, while the Swiss National Bank upped its key rate by 50bps to 1.5% - following the trend set earlier in the week by the Federal Reserve, which applied its own 25bps hike, and that of the European Central Bank on 16 March, when it said it would raise its three key lending rates by 50bps.

The ongoing tightening in the UK and Switzerland came against ongoing volatility in the macro environment and with fears of a credit crunch sparked by the collapse of Credit Suisse in the past week.

The UK rate hike takes it to its highest level in nearly 15 years, and is the 11th consecutive increase, coming just after inflation figures for February surprised on the upside.

However, investors commenting on the latest rate hikes have also suggested that the comments from central banks alongside the rate announcements suggest that the rate cycle could be closer to a peak.

Karsten Junius, chief economist, J Safra Sarasin, said of the Swiss situation: "The SNB increased its main policy rate by 0.5% to 1.5%. It also signalled that at least an-other rate hike is needed as inflationary pressures have become stronger and prices have broadly risen. The SNB also stressed that it used its FX reserves to strengthen the Swiss franc and that it is likely to do so again in the future. We expect another rate hike by 25bp in June and no further rate changes this year."

Robert Dishner, senior portfolio manager at Neuberger Berman, said of the UK situation: "Mixed message from the Bank of England which hiked by 25bps as expected. This was a 7-2 decision. While mildly hawkish on the surface as they note better growth forecasts as a result of the budget and external environment, there are dovish elements such as expecting a significant fall in inflation in 2Q 2023 to rate lower than anticipated in the February Report.  They are making this forecast despite February CPI being 0.6% higher than expected. There was no forward guidance on rates but their forecasts, if true, would note the end of the cycle could be approaching soon. However they were surprised in February and leave themselves open to further surprises should inflation remain more resilient and benefits from the Energy Price Guarantee get offset by other core goods and services costs. There is a new round of forecasts by the bank in May that could them the confidence for any major decisions."

Investor impact?

Commenting on the implications for investors, Nigel Green, CEO of deVere Group, said: "There are two key takeaways from the Bank of England's decision."

"First, the Bank has already monumentally failed to control inflation so far, causing misery for households and businesses across the country. They failed to act quickly early on to cool inflation. They resisted raising interest rates from near-zero levels for most, even as prices began shooting up due to pandemic-related supply chain snarls, Covid outbreaks and a persistent labour shortage, amongst other issues. The UK is still paying for these mistakes.

"Second, despite the Bank predicting inflation to fall even more sharply despite yesterday's shock number, it's clear that it will remain an issue for some time to come. In this environment, some companies are going to find it difficult to maintain margin and, as such, investors need to be looking at sectors that can maintain margin, despite sticky inflation.

"Healthcare is a robust sector as people will always need to stay healthy - this has come into focus more than ever since the pandemic. Also, despite wider market volatility, there's strong earnings potential due to ageing populations and other demographic changes. Plus, healthcare is becoming increasingly tech-driven, which offers fresh opportunities.

"Luxury goods can maintain margin due to the inherent aspirational 'elite and exclusive' aspect of the sector. 

"We'll look at energy because there's a shortage of energy in the world right now.

"Agriculture is another one as populations in emerging markets around the world are eating more meat. As they eat more meat, there needs to be more grain produced.

"In this and all environments, there remain two clear ways for investors to maximise returns relative to risk: the time-honoured practice of portfolio diversification. A considered mix of asset classes, sectors, regions and currencies offer protection from shocks. And to remain fully and wisely invested."