Brokers, IFAs and money experts deliver their verdict on tomorrow’s Bank of England rate decision

by | Nov 2, 2022

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With expectations in place that the Bank of England’s MPC will announce a significant hike in UK base rate at midday tomorrow, the team at Newspage has been reaching out to IFAs, brokers and money experts to get their thoughts on the economic impact of the expected hike of 0.75%, as well as it might affect borrowers and savers already struggling with the cost-of-living crisis.

Samuel Mather-Holgate of Swindon-based advisory firm, Mather & Murray Financial: “The Bank of England’s mandate is to keep inflation near the 2% target so it will almost certainly increase interest rates, most likely by 0.75%. If they were given a wider mandate than the one they have, namely trying to reduce volatility in the country’s GDP, the decision might be different and create better outcomes. We all know we are in the mouth of a recession. This will mean dramatically slowing inflation, if not deflation and a crumbling economy. The Bank of England will then be forced to reduce rates. Rather than making decisions with historic data and hindsight, I’d like to see Threadneedle Street trying to forecast where the economy is going and making decisions in the best interests of the economy. I expect Bank Rate to go up to 4% by early Spring. This will damage households and businesses and make the recession worse. They will be held in place at a high rate for too long as the Bank waits for data showing how bad things were in the previous months, and then they will fall away into next autumn. They will never return to the historic rates of near zero, but I expect to see them down to about 2% by next Christmas as I expect the recession we are already in to be a bad one.”

Craig Fish, Managing Director at mortgage broker Lodestone: “The Bank of England’s monetary policy committee are in a difficult place. On the one hand they need to bring inflation down, and on the other they need to show some empathy towards the already overstretched households of the UK. It’s extremely likely that rates will increase by 0.5% or 0.75% on Thursday, but this is not likely to have any real impact on inflation, and neither will any of the further expected rises that are coming as rates head towards 4.5%-5% next year. Likewise, this won’t have any impact on the current mortgage rates we are seeing as these expected base rate rises have already been factored in. The issue we have is that the inflation is caused by worldwide events that are completely beyond our control. It is not caused by the overstretched households of the UK going on a spending spree. They simply don’t have the money available to do so. We need a new approach and some fresh thinking to try and find new ways to tackle an age old problem. Stop looking at historic data and handling things in the same way over and over again, because look at the mess we are in right now. Why not look to the future and start trying to predict where you see the economy going and act accordingly? We are facing a recession and increasing rates is only going to deepen the problems that will come from that.”

Philip Dragoumis, owner of London-based wealth manager, Thera Wealth Management: “The markets are expecting a 0.75% rate hike by the Bank of England this week, taking the base rate to 3%. This would be the largest rise since 1989, and would take rates to a level not seen since 2008. The Bank of England, not wanting to be left out, is likely to match the 0.75% rise by the ECB and potentially the US Fed today. Expectation management, however, is important. The markets are expecting rates to peak at around 4.75% next year, but the Bank may signal tomorrow that these could peak at a lower level. After the Truss debacle, the Sunak administration is keen to bring mortgage and interest rate expectations down as this would mean a lower deficit and less austerity. As a result, we could see the beginning of the end of the rate hiking cycle as inflation is likely to come down over the next year. The downside to all this, of course, is that we are facing a big squeeze in living standards and a potentially severe recession.”


Graham Cox, founder of the Bristol-based broker, “The Bank of England has no choice but to raise rates if they want to tame inflation. They need to protect the pound, particularly against the all-powerful dollar. Any weakening in sterling will make dollar-denominated imports such as oil and gas more expensive. To date, the base rate hikes have been surprisingly timid, and I expect the ‘gently as she goes’ approach to continue with a 0.75% hike to 3%. But it’s not inconceivable they could throw in a ‘bazooka’ hike of 1% to 1.25%.”

Graham Wells, financial coach at Haddington-based GroWiser Financial Coaching“For savers and borrowers, there’s little to be gained from speculating on what the Bank of England might do with interest rates. It’s not something we can influence. What we can do, however, is take action to prepare as best we can. Savers could set some time aside to search the market for the best accounts if interest rates are hiked again. Remember not to keep too much in cash, as the long term effects of inflation will generally cancel out any interest earned. For borrowers on variable rates, consider if it’s still worth switching to a fixed rate deal or at least prepare for increased monthly payments. Think about what other expenses could be scaled back, or consider opportunities to boost earnings or other income. If you have a fixed rate loan coming to an end, check what new deals are available and remember that you can lock into a new rate a few months before your existing arrangement comes to an end.”

Edgar Rayo, chief economist at London-based finance broker, Finanze“The Bank of England definitely has to raise rates tomorrow by 0.75%. The US Fed remains hawkish, with five rapid hikes in 2022 alone, which has weakened global currencies against the greenback. Although the pound has already recovered these past days, we still forecast fluctuations until the end of the year. Raising interest rates will attract capital from overseas, which will boost demand for sterling and lift its value. The Fed has already put so much pressure on the pound, so the Bank of England’s hike will help mitigate any falls against the dollar in the weeks to come. Most lenders have already priced in a rise and those that have not have withdrawn BTL products temporarily with a view to re-releasing them after Thursday’s rate rise announcement. What the Bank of England needs is a soft landing given that its monetary policies need to work with Sunak’s fiscal strategy.”


Wes Wilkes, CEO at wealth managers IronMarket: “Like the White Rabbit in Alice in Wonderland, Andrew Bailey and the Bank of England are so late they have no choice but to deliver the 0.75% rate hike everyone has already priced in. Whilst they’re not the initial cause of the inflationary bubble, like other central banks being too late and too slow to react in 2021, they will now almost inevitably be raising rates as we head into a recession. The irony is there may even be a reversal and we could see rate cuts in late 2023 into 2024. The whole thing is a largely self-made mess.”

Lewis Shaw, founder of Teesside-based Riverside Mortgages: “The Bank of England has no option but to raise the base rate, and it will either be by 0.5% or, more likely, 0.75% to bring it closer to the current 2-year gilt yield. However, borrowers shouldn’t fear this as mortgage lenders have already priced in this hike. The only mortgage holders affected will be those on trackers and a smaller number on standard variable rates. The rationale for increasing the base rate is to try and drive down the inflation rate to 2% in line with the Bank of England’s mandate. In a bid to do this, we could easily see base rate as high as 4.5% by July next year.”

Aaron Forster, director of Derby-based mortgage broker, Create Finance“It’s likely that we will see another rate rise on Thursday to try and curb inflation. This may mean an increase of 0.5% or even higher. This isn’t all bad news for borrowers, though. Swap rates, which are the rate at which lenders borrow money, have reduced in recent weeks, which has meant there has been a decrease in some mortgage rates. So even though it’s likely we will see a rate rise, mortgage rates may not be immediately impacted. The only mortgage type that this will impact is tracker products, as these are linked to the Bank of England base rate. I believe the Bank of England’s hands have been tied in terms of dealing with inflation. The government’s handling of the UK economy over the past couple of months has given them very little choice in putting in the measures they have in place.”


Marcus Wright, MD of independent mortgage broker, Bolton Business Finance: “There’s more chance of Boris becoming Prime Minister again than the base rate staying the same this week. However, I am not expecting massive movements from mortgage lenders, as this has been priced in. Problem is, the base rate is a blunt tool. It’s used to tame inflation by basically taking money off people and encouraging saving. As painful as this can be, inflation has to be brought down.”

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