Bank Of England's First Hike Since 2023 Unlikely To Be Last This Year
Borrowers hoping the Bank of England's first rate rise since August 2023 is a one-off are likely to be disappointed, with a second increase before Christmas now a real prospect, warns the CEO of deVere Group, one of the world's largest independent financial advisory organisations.
The comments from Nigel Green come as the Bank raised Bank Rate to 4% from 3.75% on Thursday, after inflation climbed to 3.5% in September, well above the 2% target.
He says:
He continues:
Businesses are already moving. The Bank's own survey of companies shows firms expect their prices to rise 3.3% over the next year, and 68% are planning increases of their own.
The economy is also proving tougher than feared. Unemployment fell to 4.7%, and GDP unexpectedly grew 0.1% in August.
Nigel Green notes:
Pressure inside the Bank has been building for months. Three members of the Monetary Policy Committee voted for a rise in both July and September, and the UK's main central bank peers have already started tightening.
He continues:
For savers, higher rates are likely to mean better returns on cash for longer. For borrowers and investors, it points to a prolonged period where the cost of money stays elevated.
Nigel Green concludes:
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