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UK Base Rate Decisions Will Be Tight - Andrew Bailey

Journalist: Riz Malik

ended 13. October 2023

Andrew Bailey, the governor of the Bank of England, addressed attendees at the Institute of International Finance meeting in Marrakech. During his speech, he emphasized that future decisions will continue to be cautious, particularly referencing the recent 5-4 vote to maintain interest rates in the last monetary policy committee meeting.

In a separate event in Marrakech, Chancellor Jeremy Hunt, in response to questions about tax cuts, stated, "We are not in that territory."

Considering the recent decrease in fixed-rate mortgages following the decision to maintain rates, what do you anticipate might be the impact of these statements? Do you believe that the financial markets will remain stable as we approach the end of the year, or do you foresee potential turbulence ahead?

We welcome your thoughts.

 

12 responses from the Newspage community

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Editor
Riz Malik
Independent Financial Adviser at R3 Wealth
The recent 'hold' decision has led to improvements in fixed-rate mortgages but we are by no means out of the woods yet. Anyone who is expecting the Chancellor to save the day in the Autumn statement will be sorely disappointed given his track record. While the Bank of England may have provided an early Christmas gift by keeping rates steady, there remains a significant possibility of a rate increase before the year concludes. As well as being able to choose the next government we should also be able to choose members of the Monetary Policy Committee.
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Stephen Perkins
Managing Director at Yellow Brick Mortgages
Base rate decisions have not been unanimous for a long time. With so many conflicting factors from inflation, wage growth, and the overall economy, all decisions will be tight over the coming months. I would like to think we can see a hold for the remainder of 2023, or at worst one more 0.25% increase before we reach a peak. There is plenty of key data to be released to influence the decisions before the next MPC meeting.
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Darryl Dhoffer
Founder at The Mortgage Geezer
Inflation figures due 18th October, are key to what decision the Bank Of England makes on 2nd November - hopefully, recent interest rate rises have filtered through enough for a static inflation figure, which you would hope keep the Interest rate bus parked. However early comments like this from Andrew Bailey, could be a prewarning of future rises to follow...lets hope not.
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Justin Moy
Managing Director at EHF Mortgages
Caution is the key word here. Rates are slowly improving, but inflation is still way above any target set by the government. The BofE may decide to 'sit and wait' for a while, I still believe an extra 0.25% is within their plans, but any immediate rate cuts look off the agenda for the time being.
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Craig Fish
Director at Lodestone Mortgages
As we know things can change very quickly in the world of the UK economy and interest rates, but it does feel like things are very slowly improving. I don't for one minute though believe that another increase in rates is off the cards. We could well see one before the year is out, and this all depends on the next set of inflation data.
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Chris Barry
Director at Thomas Legal
There are no indicators to show that increasing the base rate will resolve the inflation issues which is very much supply lead. demand-led data is showing a deflationary trend.
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Stuart Gregory
Director at Lentune Mortgage Consultancy
Oh Andrew Bailey, has he reached Australia yet with his U-Turns? Only a few months back he thought inflation would be under 3% by December before rowing back quicker than Sir Steve Redgrave. My cynicism is that as Election Year approaches, the outlook will suddenly become 'rosy'.
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Gary Bush
Financial Adviser at MortgageShop.com
The release of the next inflation figure will sway the Bank of England Monetary Committee meeting in November - it's impossible to call at this point, it will be close to predict even when the new data is released. I don't see a turbulent end to 2023, or is that actually I pray that 2023 will end with no turbulence?
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Graham Cox
Director at Bridging Hub
Does Andrew Bailey believe another base rate increase is more likely at the next MPC meeting on November 2nd? That's the slight concern after hearing his comments from Marrakech. As he says, the last vote was 5 to 4 to hold rates, so it could go either way.

I suspect that inflation will continue falling sharply and we're through the worst now. But only time will tell.
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Alastair Hoyne
CEO, Finanze Capital at Finanze Capital
Given recent data released on rising debt, it's anyone's guess where we go from here. Although cuts to fixed-rate mortgages have helped, it's clear the damage to many households is already done. Encouraging borrowing and investment for growth is dependent on confidence in the financial markets, and that seems to be in short supply right now. As in the past, we have to continue to work within prevailing market conditions. This isn't our first financial crunch and it won't be the last.
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Gareth Davies
Director at South Coast Mortgage Services
I'd like to think we're near the peak of the base rate climb, but it would take a brave person to predict it with certainty. I can still see some room for it to increase a little more, and it's wise to air on the side of caution.

The fixed rate reductions have been welcome but could slow down now until the next decision. Surely there's more probability for things to improve than get worse, but we've all seen how quickly things change, especially when rates increase. The public need to lock in a mortgage deal ASAP, and have a reliable broker then monitor the markets up until their deadline.
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Ben Tadd
Director at Lucra Mortgages
Based on one of, if not the biggest mortgage lender in the UK in Halifax, announcing further cuts to their existing product range in the wake of Andrew Bailey's comments released this morning, it would appear in the immediate aftermath at least, that these statements have done little so far to rock the market. His comments, suggesting that future decisions on the base rate will remain tight, advising that some progress in tackling inflation has been made, but highlighting we're not quite out of the woods just yet, appeared to be precautionary, rather than indicative of what will happen with upcoming base rate decisions. Financial markets shouldn't therefore react with any great caution and rates are likely to remain stable until the end of the year.