The Bank of England’s incompetence continues to punish households and businesses across the UK as interest rates are hiked by a quarter of a percentage point to 4.5%, taking borrowing costs to their highest since 2008.
This assessment from Nigel Green, the CEO and founder of deVere Group, one of the world’s largest independent financial advisory, asset management and fintech organisations, comes as the UK central bank announces its 12th consecutive rate rise on Thursday.
He says: “The Bank of England has failed households and businesses across the UK who are continuing to be punished by the central bank’s failings.
“They failed with their inaction at the start, passively standing by for far too long last year when the UK was first coming out of Covid lockdowns, and prices were already starting to surge.
“They’re failing again now with this latest rate hike – the 12th in a row.
“The Bank seems to be intent on driving the UK’s consumer-led economy into a deeper recession by continuing to make borrowing more expensive, leading to a reduction in spending and investment. Inevitably, this will trigger a further slowdown in economic activity.
He continues: “To add insult to injury, central bank monetary policy is notoriously slow to take effect.
“It is said that changes in interest rates take a year to 18 months to feed themselves into the broader economy. Given the many interest rate hikes over the last 18 months, it would be astonishing if we did not see a marked slowdown in employment growth and demand over the coming months.”
The deVere CEO goes on to add: “Officials at the Bank of England have been behind the curve from the outset.
“They’re going too hard, too late.”
Bank of England policymakers voted 7-2 for May’s hike, with Monetary Policy Committee members Silvana Tenreyro and Swati Dhingra again expressing their opposition to further tightening.
Last week, the US Federal Reserve and the European Central Bank both raised their borrowing rates by 25 basis points.
At the meeting after the announcements, Fed Chair Jerome Powell hinted at a pause moving forward, but ECB President Christine Lagarde said it was too early to do so.
The deVere CEO concludes: “The announcement of another hike is a further blow for UK households and business who are the ones left struggling to deal with decisions made by the Bank of England, which is still failing to curb the fastest inflation of any major economy.”