The Bank of England’s interest rate hike has been slammed as “premature” by the CEO of one of the world’s largest independent financial advisory organisations, who added the rate decision could be “motivated to protect reputations.”
Nigel Green, founder and chief executive of deVere Group, is speaking out after the governor of the UK’s central bank, Mark Carney, announced today (Thursday) a rate rise from 0.5 per cent to 0.75 per cent, taking the UK’s base rate of interest to its highest level since March 2009.
Mr Green comments: “Hiking interest rates now – for only the second time since the financial crash – is, to my mind, premature.
“At just above the Bank’s target of 2 per cent, inflation is not currently a key issue. In addition, major uncertainty surrounding Brexit, the looming threat of international trade wars, and absolutely average economic growth, business and consumer confidence are on the slide.
“As such, there seems little real justification to increase interest rates now.”
He goes on to add: “Against this back drop, why is the Bank of England raising rates today?
“Has the decision been motivated in order to protect reputations and credibility after the Bank’s Governor and some of the committee had effectively already said the rise would happen?”
The deVere CEO concludes: “Whilst today’s decision to hike rates is unnecessary, I think that the Bank is likely to refrain from any more increases until after Brexit.”
However, Alpesh Paleja, CBI Principal Economist, said: “This decision was in line with our expectations. The case for another rate rise has been building, with inflationary pressures being stoked by a tight labour market and many indicators now suggesting that weak activity in the first quarter of 2018 was a blip.
“The Monetary Policy Committee has signalled further rate rises over the next few years, if the economy evolves as they expect. These are likely to be very slow and limited, particularly over the next year as uncertainty around Brexit takes its toll on business investment.”