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Bank of England considering 12th consecutive interest rate hike

Journalist: Jake Carter, Mortgage Introducer

ended 10. May 2023

Do you expect for the central bank to increase the base rate yet again on the 11th of May? If so, by how much?

How will yet another increase impact the market?

What are your expectations for the base rate over the remainder of 2023?

5 responses from the Newspage community

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Editor
Andrew Montlake
Managing Director at Coreco
The Bank of England will no doubt feel that they have to act to take Base Rate higher, but they have a careful path to navigate. Whilst the markets look to have priced in another quarter-point rise, the danger is that the Bank will once again go that step too far and cause more issues further down the line than they are able to solve now.
I hope that any rise will now be the last and a period of calm ensues to enable all the recent rises to filter through and take effect.
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Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
The central bank shouldn’t raise rates because it’s an ineffective strategy to control inflation on essential items. It’s failed for the last year and will continue to fail, inflation will drop when price increases are baked in for the year. That said, the bank will raise rates because they are wed to the idea that doing something with rates shows them as less impotent. A rate rise will negatively affect the property market that is already on shaky ground.
The whole set up is a shambles and Andrew Bailey should resign.
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Graham Cox
Director at Bridging Hub
Alas, another base rate increase looks likely, as getting inflation down is proving a hard nut to crack. Lenders are likely to increase mortgage rates, though many have already done so this week in anticipation.

Anyone on a tracker rate will see their monthly mortgage payments increase. And of course, anyone looking to purchase or remortgage will be looking at higher rates, though most banks and building societies are doing their best to hold rates down, for fear of business drying up.
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Amit Patel
Adviser at Trinity Finance
Another 25 bps hike is a dead cert given The Fed voted to increase interest rates to a 16-year high on Wednesday. This will hurt borrowers who are on a tracker rate and those who are on the lender's standard variable rate. It will have a big impact on mortgage prisoners and those trapped in products sold before the 2007-08 financial crisis. It will push many homeowners over the edge and into mortgage arrears through no fault of their own. The MPC needs to get a grip and do the right thing and keep rates on hold, but sadly I can't see it happening.
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Alastair Hoyne
CEO, Finanze Capital at Finanze Capital
When we strip back to the fundamentals of economics, the purpose of the 5 key macroeconomic objectives is to ensure healthy economic growth whilst maximising standards of living. Thus, it comes as no surprise that the inflation figure for March 2023 will be at the forefront of the Monetary Policy Committee’s mind when they meet tomorrow. The Consumer Price Index rose by 10.1% year on year to March 2023, as confirmed by the ONS, a figure well above the 2% target rate. Finanze is anticipating a further 25 bps increase tomorrow as the UK continues to strive for price stability. Whilst an increase in base rate may come as a concern to many borrowers, interest rates are not expected to remain high for too long. Provided inflation starts to fall, as seen in the US, we are anticipating rates to fall to around 3% by the end of 2024.