Last week the Bank of England (BoE) raised rates again, in what is proving to be one of the fastest tightening cycles in living memory, while warning it expects the UK to enter a recession before the end of the year.

The 0.5% increase, which raised the central rate to 1.75%, was notably bigger than earlier hikes this year, marking a step up in the Bank’s effort to control inflation This compares to 0.1% at the start of the year, and 0.75% pre-COVID-19.

The reason for the jump remains inflation, which the BoE now predicts will go higher and last longer than it previously thought. It forecasts inflation reaching 13% by the end of 2022 and remaining high throughout 2023.

It also warned that GDP growth is slowing in the UK, as gas price rises hamper the outlook for activity. As a result, it now predicts we will enter a recession in Q4 this year, and that this recession could last for five quarters.

Some, including the current UK Attorney General Suella Braverman and Tory leadership hopeful Liz Truss, have criticised the Bank for moving too slowly in raising interest rates, arguing it should have acted when inflation began to increase at the end of 2021 and start of 2022.

However, speaking on BBC Radio 4’s Today Programme, Governor Andrew Bailey defended the Bank’s record, saying: “I’d challenge anyone sitting here a year, two years ago, to say there will be war on Ukraine and it will have this effect on inflation.”

Despite this news, UK markets were relatively calm last week. Over the course of the week, the FTSE 100 rose 0.2%, and the more domestically focussed FTSE 250 only fell 0.6%.

Azad Zangana, Senior European Economist and Strategist at Schroders, suggests one reason for this might be that, although the Bank’s forecasts were challenging in the short-term, looking to 2025 painted a slightly different picture.

He noted that the recession is expected to raise the unemployment rate to over 6% by 2025. This should help bring inflation down to 2% by the end of 2024, and 1% by the middle of 2025.

Zangana said: “The BoE’s forecast is conditioned on the market pricing for interest rates, which at the time had rates rising to 3% in 2023, before falling back to 2.2% by 2025. Based on the forecast for inflation, there appears to be a signal to investors that they have assumed either too many rate rises, or not enough of a fall in rates at a latter point.”

In other words, although the Bank’s short-term warnings will have spooked some, for those looking longer-term, the interest rate environment might become more favourable than previously expected.

This is where active stock managers can add value, as they look to invest in companies better placed to endure tough times and reduce the volatility in your portfolio.

For example, reacting to the rate rise, NinetyOne’s Global Quality Portfolio team said: “As bottom-up stock pickers, we tend to focus on high quality companies with enduring competitive advantages, low sensitivity to the economic and market cycle, healthy balance sheets and sustainable cash generation. These companies should be well positioned to continue to compound during periods of economic uncertainty and changing monetary policy. Specifically, as the companies have low financial leverage, and in many cases net cash positions, it helps minimises the impact of higher financing costs as rates rise.”

The coming week will see the first estimates for Q2 GDP growth on Friday. This preliminary GDP reading is based on incomplete data and therefore subject to revision but is widely forecast to show a contraction of -0.2% quarter-on-quarter.

Outside of the UK, the geopolitical situation continued to become more challenging.

US Speaker of the House of Representatives Nancy Pelosi visited Taiwan, angering the Chinese Communist Party (CCP). The CCP followed her visit with live fire military exercises around the island, which are temporarily disrupting shipping routes through the Taiwan Strait – adding to existing supply chain woes.

Both the US and China are set to release their respective Consumer Price Index (CPI) readings on Wednesday. The US saw headline inflation shoot up to 9.1% at the last reading. The consensus forecast is for the pace of annual consumer price rises in the States to have fallen back slightly to 8.7%.

A fall in the rate of inflation is likely to lead to much discussion over whether it has begun to peak or not, and this may well have an impact on US markets as a result.

Selling a second property? Cashing in a share portfolio? When you sell a valuable asset, you may have to pay Capital Gains Tax (CGT) on your profits.

One possible way of avoiding – or at least reducing – this tax bill is to give an asset to your partner, or split it with them. By doing this, both of you are able to use your individual CGT allowance and reduce the amount of tax payable overall.

CGT may be payable when you sell certain assets and your gains are over the annual CGT allowance. The CGT allowance for 2022/23 is £12,300. This is the amount of profit you can make on the sale of chargeable assets this tax year before you have to pay CGT. You get a new CGT allowance each year. However, if you don’t use it in one year, it cannot be carried over to the following year.

If the sale of an asset is going to take you over your £12,300 CGT allowance and land you with a tax bill, you can give the asset to your partner assuming their allowance is still available. They can then sell it and use their annual allowance so you can reduce or avoid paying CGT altogether.

It’s important to note, though, that you have to give away the asset outright and your partner will become its legal owner. If you’re planning your financial future together, this shouldn’t be a problem – nonetheless, it’s not something to do without proper consideration.

CGT can make selling assets seem fraught with hassle. But depending on your circumstances and over the long term, it could still work out to be more tax efficient than drawing down other assets, such as your pension.

By talking to a financial advisor on a regular basis and considering all your assets together – rather than in isolation – you’ll be able to build a solid financial plan. We’ll be able to help you work out which assets you need to sell and when in order to maximise your financial well-being.

“It’s amazing and a dream come true. It was a roaring crowd and everything a gymnast could ever have wished for.”

Marfa Ekimova, 17, on becoming the first English gymnast to ever win an all-around gold medal in the rhythmic gymnastics at the Commonwealth Games.