Copy article

Paradox on Threadneedle Street

ended 20. June 2024

Following the Bank of England once again leaving rates on hold, Newspage asked experts if the central bank can truly be considered independent if its decision-making was influenced by the General Election — and whether doing nothing to avoid influencing political outcomes is inherently political? Their views are below.

10 responses from the Newspage community

Copy all

Copy

Editor
Riz Malik
Independent Financial Adviser at R3 Wealth
The Monetary Policy Committee has a clear mandate and they should not deviate from that. If they are influenced by political pressures they are not fit for purpose and need to be reformed. An entity cannot be considered independent if it adjusts its decision-making for political reasons. Given today's voting split, it is hard not to be suspicious.
Copy

Editor
Jack Tutton
Director at SJ Mortgages
The Bank of England should maintain their true independence, do the right thing and cut the base rate tomorrow. This will breathe much needed positivity into the market, and will be welcomed by all voters whether they plan to vote left or right in July.
Copy

Editor
Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
The main reason the central bank didn't cut interest rates is that inflation is exactly where they want it. Bailey won't be worried about it falling below target and having to cut rates, but what will happen if it ticks back up as expected. Those who forecast rate cuts this year may be dissappointed, and it won't be down to politics but economics.
Copy

Editor
Rohit Kohli
Director at The Mortgage Stop
The Bank of England has been steadfast in saying that the only thing driving them is the 2% target. Yes, they need to look at the wider economic data to help them make a decision, but the 2% target has been a constant so a 0.25% should have been the outcome. However, no one is truly independent and the General Election will be a factor in their decision-making. But being fair to the MPC, they are damned if they do and damned if they don't so the safest option would be to continue to play the wait-and-see card, which they seem very capable at doing.
Copy

Editor
Simon Bridgland
Director at Charwin Private Clients
It would be no surprise that Andrew Bailey’s ear is very much kept warm by the guided breath of a doomed Prime Minister. Wim Hof's guided breathing could teach the MPC far more about making calm decisions. How independent the MPC actually is and how independent it is meant to be are like Labour and the Green Party, polls apart.
Copy

Kundan Bhaduri
Property Developer and Portfolio Landlord at The Kushman Group
The MPC has shown us how toothless and bovine their decision making is. Aside from the made-up reasons of 'keeping it down for longer' (inflation, I meant!) the real reason is that the MPC is scared of making any decisions this side of the parliamentary elections. They are running helter skelter scared of how this decision of today might come to haunt them in two weeks' time. That, and that alone is the real reason why the MPC chose not to intervene now, but kick the can into the long grass for the next MPC meeting. Shameful, sordid and timid to say the least.
Copy

Scott Taylor-Barr
Principal Adviser at Barnsdale Financial Management
Whilst it's great that inflation is finally back to target, today's figure will have little impact on the decision-making happening at Threadneedle Street. Their eyes will be firmly fixed on the future path of inflation and what the Bank's data suggests it will be in 12 to 18 months time, as any actions they take tomorrow won't filter through to the economy and make significant impact for at least that length of time. So a cut tomorrow would suggest they're thinking inflation would, without their intervention, rise again in the coming months.
Copy

James Bull
Mortgage Broker at JB Mortgages
Normal people are struggling with the high cost of living and high mortgage rates only makes this worse. I would urge the bank of england to reduce its base rate at the earliest opportunity to provide some much needed relief to homeowners.
Copy

Amit Patel
Adviser at Trinity Finance
The Bank of England have a statutory duty for setting interest rates without day-to-day political influence and 'to promote the good of the people' by maintaining monetary and financial stablility. If the Bank of England is truly independent then it must do the right thing and vote to decrease the base rate tomorrow.
Copy

Rob Gill
Managing Director at Altura Mortgage Finance
The underlying inflation data was probably not quite strong enough to justify a base rate cut just yet. Ultimately however we will never know if the proximity to a General Election could have made a difference to their decision.