The Bank of England’s expected interest rate rise has been slammed as “harmful” and a “misery rate rise” by the CEO of one of the world’s largest independent financial advisory, asset management and fintech organisations.
The damning assessment from Nigel Green, chief executive and founder of deVere Group, which has more than $12bn under advisement, comes as the Bank of England is set to deliver its latest interest rate decision on Thursday amid soaring prices and warning signs that the UK is facing a recession this year.
He says: “Due to the Bank of England passively standing on the sidelines for far too long last year when the UK was coming out of Covid lockdowns, and prices were already starting to surge, they are now feeling the need to aggressively rate hikes.
“It’s too hard, too late.
“Now, just as the UK is nose-diving into a likely recession they are slamming on the brakes with a probable 0.5% hike, which can be expected to make the downturn in Britain’s consumer-driven economy worse and last for longer.
“It would be the largest increase in interest rates since 1995. It would take rates to 1.75%, and back to levels we’ve not seen since 2008.”
The deVere CEO continues: “The decision means higher borrowing costs for property owners on variable rate mortgages. Lenders will also increase the rates they charge on personal and business loans at a time when households and firms are facing a shocking cost of living crisis.
“The Bank of England’s anticipated hike would be harmful to the economy and pile on the pain for people across the country.”
Consumer price inflation in the UK is currently at 9.4%, considerably higher than the BoE’s own target of 2%. The central bank’s governor, Andrew Bailey, has repeatedly stressed that he will do whatever it takes to get back to, or at least near, that target.
However, many experts, including Nigel Green, stress that much of the inflation problem is largely fuelled by external issues, such as rocketing energy prices, rather than by domestic ones, which will make it more difficult to halt surging prices by hiking rates.
The deVere CEO concludes: “The Bank of England’s rate increase would be a misery increase only.”