Where next for the base rate? - finance experts respond

Many financial services experts still predict a 0.25% base rate rise at next month's meeting.

Related topics:  Finance News,  Interest rates
Rozi Jones | Editor, Barcadia Media Limited
19th July 2023
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"Despite the lower than expected inflation numbers today, they are still four times the Bank of England's target."

Following today's inflation data, Newspage asked 18 financial services experts from around the UK what they think the Bank of England will do at the next interest rate meeting.

Kirsty Wells, director of Saint Leonards-on-Sea-based Blueprint Mortgages: "Following Wednesday's inflation data, let's hope the Bank of England doesn't increase the base rate as much as previously expected at its next meeting. However, I still think we will see a 0.25% increase in the base rate next month. This is unfortunate as many mortgage holders are already under immense pressure and so many people are panicking with rising mortgage rates and general living costs. As inflation is now coming down, mortgage rates need to start doing the same."

Wes Wilkes, CEO at the Newcastle-under-Lyme-based wealth manager, Net-Worth Ntwrk: "Despite the lower than expected inflation numbers today, they are still four times the Bank of England's target. This may be enough for them to justify another 25bps rise in the base rate in August but the likely sharper fall in inflation mid-August could lead to a pause as we see how the numbers develop. The market looks to be pricing in a lower terminal rate already."

Craig Fish, managing director at London-based mortgage broker Lodestone: "Based on previous decisions, I fully believe the Monetary Policy Committee will continue with its unproven approach and increase rates further. The hope would be that they pause for breath until after the August inflation figures are released, as they are announced after the next MPC meeting, but I very much doubt it and I expect a 0.25% increase in the base rate on 3 August."

Amit Patel, adviser at Welling-based mortgage broker, Trinity Finance: "Given the positive news this morning that inflation has dipped it would be prudent for the Bank of England to pause increasing the base rate at the next meeting. However, I don't think they will and we can expect an increase of 0.25%, which will inflict further pain and misery on ordinary households."

Rohit Kohli, director at Romsey-based mortgage broker, The Mortgage Stop: "I do not think this drop in the rate of inflation will be enough to dissuade the Bank of England from more rate rises. They have looked weak and indecisive so I don't in any way see them reducing interest rates until inflation drops significantly closer to the 2% inflation target. I expect a further rate rise, maybe another 25 basis points to capitalise on the groundwork they have laid down over the past few weeks. I hope that we see some stability, as this will do much to restore confidence in businesses and the housing market."

Riz Malik, director of Southend-on-Sea-based independent mortgage broker, R3 Mortgages: "A minor rate increase is now likely in early August. However, should the Bank of England maintain rates at their current level, we might be on the brink of a pivotal moment. If the inflation data for August — which accounts for July's energy price dip — continues on a downward trajectory, we might see a pause in the aggressive rate hikes. Given their understanding that it takes a while for their actions to permeate the market, and after enduring 13 gruelling increases, the Bank may deem it enough in light of the recent data."

Elliot Cotterell, director of Bristol-based mortgage broker, Windsor Hill Mortgages: "Inflation is down to 7.9% but I don't think this is quite enough to convince the Bank of England to take its foot off the pedal at this point. We can certainly take the little wins where possible as this will have an impact on lenders' decisions. However, I don't think this is quite enough to stop a further increase in the base rate as this appears to be the only tool at the disposal of the Monetary Policy Committee. The next MPC meeting is on the 3rd of August and the market has set the probability to 58% for a 0.5 bp rise and others believe this will be limited to a 0.25 bp rise."

Ranald Mitchell, director of Norwich-based independent mortgage broker, Charwin Private Clients: "Good to see some more positive inflation figures today, but there is a long way to go. It does show that base rate increases are starting to have the desired effect. We remain massively over the 2% target and I don't expect any easing up in base rate increases until inflation reaches targeted levels. Encouraged by the reduction in inflation, Threadneedle Street will likely go for the kill, and push another 0.5% on rates to continue to batter down stubborn inflation."

Graham Cox, founder of the Bristol-based broker, SelfEmployedMortgageHub.com: "With inflation now falling, it's time for the Bank of England to take its foot off the pedal and stop raising the base rate. In my view, the MPC haven't given nearly enough time for the last four or five base rate rises to have an effect. We're already likely to be heading into a recession, so further hikes at this point would only make it more severe than necessary."

Lewis Shaw, founder of Mansfield-based Shaw Financial Services: "I expect the Bank of England to want to consolidate today's positive inflationary data with a further rise of 0.25% to ensure it's not an anomaly and they've caught the inflationary tiger by the tail. Moreover, it's almost certain that on 16th August, the next release of the CPI data will show another reduction as energy costs have fallen this month after Ofgem dropped the price cap following tumbling wholesale prices. So, perhaps we could see a hold at the MPC meeting in September and, maybe at 5.25%, the base rate has hit its peak. However, only time will tell."

Justin Moy, founder at Chelmsford-based mortgage broker, EHF Mortgages: "The positive news about inflation confirms that costs are slowing down, but are still high compared to this time last year, so I think the Bank of England will continue to push rates upwards. I expect a 0.25% increase in August and a further 0.25% in September, assuming inflation continues to fall at the same rate, so 5.5% may be as far as the base rate goes. We expect to see a little bit off swap rates in the next few weeks, not wholesale changes to pricing but enough to give us all some confidence as we head into the latter stages of the year."

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