Should the Bank of England raise rates this week? Views from financial planners and brokers

by | Jan 31, 2022

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At it’s meeting this Thursday, the Bank of England’s MPC is expected to hike UK base rates again this week to contain 30-year high inflation. What do financial advisers, planners and brokers think will happen? Is this the right time to raise rates and what do they think would be the biggest implications for clients if the Bank does act? 

Daniel Wiltshire at Bradford-on-Avon-based Wiltshire Wealth: “The Bank of England is caught between a rock and a hard place, namely soaring inflation on the one hand and a fragile economy on the other. Rising interest rates will be painful for many households and small businesses in the short term, but runaway inflation would be far worse. The Monetary Policy Committee also has its own credibility to consider. The stakes couldn’t be higher.”

Adrian Kidd, chartered wealth manager at Aylesbury-based EQ Financial Planning: “The Bank of England should raise rates and it will. Central banks have been slow off the mark due to Covid but some upward motion to rates is long overdue. Care is needed, however, as we saw last week how easy it is to spook markets with significant volatility in the US. Central banks find themselves in a pickle as moving too aggressively and too quickly could mean a recession ensues. The balancing act is immense. A lot of mortgage holders are on fixed rates so this shouldn’t have too much of an impact right now. But rates being 1% higher in a year’s time could mean some future pain for borrowers, especially if they have already stretched themselves to the limit.”

Aaron Strutt, product and communications director at Trinity Financial: “The Bank of England base rate has to be raised to a more normal level at some point, but at the moment when so many other costs are rising another hike will not be a popular decision. With the National Insurance increase likely to go ahead, energy price rises and the cost of living generally getting more expensive it makes sense for borrowers to ensure they are getting the best deals on their mortgages, credit cards and loans. Borrowers can often adjust their outgoings to make them more affordable if they are worried about their finances.”


Lewis Shaw, founder of Mansfield-based Shaw Financial Services: “The Bank of England has to get a grip on raging inflation but will small rate rises achieve that goal? Probably not. Unfortunately, we’ve got a Government so preoccupied with alleged lockdown nonsense they’re asleep at the wheel of the economy, and the cliff edge that many of us have been warning about for 18 months is getting dangerously close.”

Marcus Wright, MD of Bolton Business Finance“Even with an interest rate rise to 0.5%, this would still be lower than before the pandemic. With inflation at a 30-year high, I think another small rise is both expected and fully justified. Inflation poses a real risk to our post-Covid economic recovery and cannot be ignored any more.”

Ross Boyd, CEO of mortgage switching platform, Dashly: “The Bank of England’s mandate is to keep inflation at 2% so with inflation now significantly higher it has no choice but to raise rates this week. It has held back from raising Bank Rate so far due to the fragile Covid economy and sentiment but inflation is now wildly out of control and the dangers it poses to the economy are immense. The vast majority of mortgage holders are on fixed rates anyway so will be protected from the full impact of a rate rise. If the Bank doesn’t get a grip on inflation soon, the entire UK economy could unravel.”


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