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Should the Bank of England raise base rate next week?

Journalist: Jon King, Daily Express Online

ended 25. July 2023

The BoE will announce any changes on 3rd August. The Daily Express is looking for strong views on whether the Bank should leave base rate at 5%, hike further or lower it and how any of those moves might affect households, businesses and debtors, including the Government. 

My deadline is midday today and I'm looking for responses of two or three paragraphs.

7 responses from the Newspage community

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Marcus Wright
Managing Director at Bolton Business Finance
The Bank of England should not raise rates any further, full stop. In fact, the Monetary Policy Committee seems to contain the only people in the entire country that think rates need to go up further. Inflation is starting to come down and the most recent rate rises have not even had a chance to feed through to the economy yet. We will have problems much worse than inflation if they keep raising rates, like a meltdown in the housing market and a serious economic crash.
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David Robinson
Co-Founder at Wildcat Law
Leave the base rate alone. Mortgage rate shock is already poised to cause significant economic disruption with the looming prospect of increased defaults and repossessions. Even if we avoid a property market collapse, the impact of less disposable income on the general economy will dramatically restrict growth at a time the Chancellor in particular needs it to keep up with public spending demands. Raising rates now when not needed would smack more of a fatalistic clinging to an expired doctrine than modern world economics.
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Keith Budden
Managing Director at Ensurety
If I had the decision, I would leave the base rate at its current level for the next two months and see how much effect it has. After all, in today's complex economic space, any change in base rate takes a while to be reflected in market activity. If it is to be raised, which I suspect it will, please let it only be by 0.25%. I really do not see the indicators there to justify a further 0.5% increase. I hope I'm right!
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Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
All the data is showing that raising rates has failed and inflation is coming down at its own pace and will return to target soon, increasing rates will likely lead to deflation over the medium term, a severe recession, a housing price crash of up to 25% and homelessness on a colossal scale. The only right thing to do would be to slowly cut rates until they are around 2%. This would breathe confidence back into the housing market, equity investments would rise and households currently struggling to put food on the table would have some respite.
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Wes Wilkes
CEO at IronMarket Wealth
The Bank must raise rates but perhaps by 0.25% rather than 0.5%. I appreciate it's tough for borrowers and businesses but while we have seen inflation numbers fall from their highs in recent weeks, they are still four times the Bank of England's target of 2%. We saw in the 1970s the risk of halting too soon and how quickly inflation can roar back causing significant economic damage. Raise once more and observe the data as it comes through to perhaps then pause in September should the recent downward change become a trend. The biggest policy error was to be so late in tackling inflation, so to compound this now by pausing would be scandalous.
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Imran Hussain
Director at Harmony Financial Services
Leave the base rate well and truly alone would be the best thing to do as the whole country is nervous around the Bank of England's decision to increase rates as the only blunt instrument they seem to be using to combat inflation, with 13 consecutive base rate rises since December 2021 the impact on mortgage rates rising is causing much panic for borrowers with inflation dropping slightly now is the time to hold as many families are seeing disposable income pretty much disappear there are only so many subscriptions people can cancel before they are simply working to just turn the lights on.
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Tom Anderson
CEO at Hummingbird Agency
As a business owner, I am concerned about the potential implications of a further base rate hike. It could lead to increased borrowing costs, reduced consumer spending, inflationary pressures, impact government debt and potentially slow down economic growth. We're looking at tripling our growth over the next 3-5 years but the economic uncertainty is making that particularly difficult. Our advertisers are reducing spend as they aren't seeing as positive ROI compared to before Covid due to reduced consumer spending. I would urge the Bank of England to carefully consider the potential consequences of their decision on businesses, households and the overall economy before making any changes to the base rate. Open communication and a transparent understanding of the economic outlook will be crucial for businesses like mine to plan and navigate through any changes effectively.