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Increasing interest? Hedging considerations in light of rising interest rates
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If what goes up must come down, then what comes down will go back up; such is the case with interest rates. Taking approximate figures for three-month ICE GBP LIBOR (source: Bloomberg): an increase in that rate from 0.26 bps on 31 December 2021, to 3.36 bps on 1 November 2022, appears steep. It is easy to forget that the same rate was 6.3 bps on 30 September 2008. The present rising interest rate environment is refocussing the minds of borrowers on the importance of hedging interest rate risk.
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