Should the Bank of England raise rates today? – reaction

by | Feb 2, 2023

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Free PR platform, Newspage, asked IFAs and brokers whether the Bank of England should raise rates today. Their responses have been shared with IFA Magazine.

David Robinson, Co-Founder at Wildcat Law: “For Threadneedle Street, it’s a case of ‘damned if you do, damned if you don’t’. Interest rate rises are needed to bolster Sterling versus the Dollar. This is critical to bringing down imported inflation, which is hitting everyone’s wallet at the moment. However, an interest rate rise at a time when we have one of the weakest economies in the developed world is a hefty gamble that will result in many individuals and businesses being forced into insolvency. The flip side is that it may be the lesser of two evils, as if they don’t raise rates then Sterling will slide against the Dollar again. This will result in rising household bills, causing even more misery for those least able to afford it. Jeremy Hunt is probably feverishly hoping that rates do not rise given the implications this will have for government debt.”

Philip Dragoumis, Director and Owner at Thera Wealth Management: “Inflation is slowing all over the world, and it is slowing faster than the central bank models might expect. In the UK, a recession is a far more likely scenario than inflation this year and there is a risk that the Bank of England’s policies may have overshot. Given the data up until now in the UK, a pause would be warranted. We have a very fragile economy right now post-Brexit, post-Covid and with all the political issues that followed the Truss administration last year. It would be wrong to throw the baby out with the bathwater.”

Steven Rowe, Director at Lucent Financial Planning:The Bank of England should not raise interest rates on Thursday. Why? It takes six months for interest rate rises to have a noticeable impact on inflation so previous rises have not impacted fully yet. The Chief Economist for the World Economic Forum indicated that inflation pressures are expected to ease in 2023 globally. The amount of money in the system following years of Quantitative Easing and vast government interventions due to the pandemic are being reduced with global interest rates rising and QE being reversed. Meanwhile, short-term supply chain issues caused by the pandemic and energy issues are also improving, meaning there will be downward pressure on prices. For the UK, house prices are falling as fixed rates expire and people go on more expensive rates, mitigating inflation further.”


David Conway, Director at Clayhall Financial Services Ltd: “Yes, inflation is still well above an economically responsible level. It needs to come down and interest rates allow the amount of money in the system to come down through increased bond sales and increased savings. Inflation is a necessary part of a thriving economy, but higher than desired levels lead to the cost of living crisis followed by unemployment and a cycle that can’t be broken. The headline ‘highest interest rate for 14 years’ doesn’t mean the cost of living crisis is expected to be worse for households and there should be context and education to calm the concerns this rate rise could bring.”

Mark Hosker, Mortgage Adviser at Cyborg Finance:“I have mixed feelings about the Bank of England’s potential interest rate hike. On the one hand, inflation remains well above target and acts as a subtle tax on the economy, causing damage. It is the Bank’s job to lower the inflation rate. On the other hand, I would prefer for them to not increase the base rate at this time as households are already stretched and the effects of previous hikes have yet to fully settle. On top of that, most inflationary pressures are coming from external sources, which cannot be controlled by domestic rate increases.”

Scott Gallacher, Director at Rowley Turton:“Of course not. Today’s high inflation is primarily imported due to higher energy prices and supply issues overhanging from the pandemic. However, the Bank of England seems intent on clobbering the poor, hard-working UK consumer into submission with higher and higher mortgage payments. Consequently, it’s not hard to see why many consumers and businesses are pessimistic about 2023. By its own admission, the Bank of England expects inflation to fall back anyway. This is because inflation has mainly been imported through higher energy prices and the costs of foreign goods and services. And the prices of these won’t increase at the same rate moving forward. However, I think the Bank of England thinks it needs to be seen as acting rather than letting things settle naturally.”


Craig Fish, Founder & Director at Lodestone Mortgages & Protection: “No, the Bank of England should not raise rates on Thursday, although there’s no doubt it’s a difficult balancing act. Inflation is dropping and is expected to drop further in the coming months, so adding extra burden onto businesses and consumers is counterintuitive. It also needs to be noted that at the last meeting, some members thought that rates should remain the same, so clearly there is uncertainty on the committee, too. No doubt there will be an increase, though, of 25-50 basis points.”

Samuel Mather-Holgate, Independent Financial Advisor at Mather and Murray Financial:“Should they? No. Will they? Yes. The Bank of England has a simple, narrow mandate. Keep inflation to 2% and don’t be forward looking. The general population is feeling the pain of sky-high inflation and the economy entering a recession. On top of this, the government feel it’s the right time to heap a huge tax burden on us all, despite predictions showing we will be the only major economy to decline this year. It’s time for the government to change course or be booted out. Cut taxes, allow the central bank to keep rates stable and see growth return to the economy. Unfortunately, there are no signs of either, so expect higher rates, higher taxes and a deeper recession than is really necessary. The human cost of this is more businesses going bust, higher unemployment and rising homelessness. Inflation falling in the summer in a certainty.”

Riz Malik, Director at R3 Mortgages: “Rates should not be increased. The UK has had to digest a number of rate hikes in a short period of time and is still doing so. The Bank of England has already predicted a significant decrease in inflation this year and next, and any further rate hikes will stifle our recovery. Things are not looking good for the UK as confirmed by the International Monetary Fund’s negative outlook and we do not need an additional interest rate increase.”


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