Home > News > BOE: Keep interest rates at 4% to help UK households

BOE: Keep interest rates at 4% to help UK households

A senior Bank of England policymaker has said interest rates should be held at 4% amid signs of cooling inflation rather than adding to pressure on households and businesses with a further rise in borrowing costs.

Swati Dhingra, an external member of the Bank’s rate-setting monetary policy committee (MPC), said higher borrowing costs would pose a “material risk” to the UK economy.

“It risks unnecessarily denting output at a time when the economy is weak and deepening the pain for households when budgets are already squeezed through energy and housing costs,” she said in a speech to the Resolution Foundation thinktank in London.

“In my view, a prudent strategy would hold policy steady amidst growing signs external price pressures are easing and be prepared to respond to developments in price evolution. This would avoid over-tightening and return the economy sustainably to our 2% inflation target in the medium term.”

Her intervention comes amid expectations in the City of London that the Bank will raise rates at its next meeting on 23 March. Financial markets have fully priced in a 0.25 percentage point increase to 4.25%, with some investors betting on a bigger 0.5 percentage point rise.

Financial markets have shifted to take account of the prospect of the US Federal Reserve raising borrowing costs higher than previously expected after the American central bank’s chair, Jerome Powell, said there was still “a long way to go” to tame inflation in the world’s largest economy.

Threadneedle Street has raised rates 10 times in succession since December 2021 in response to the UK’s annual inflation rate soaring to more than five times its target of 2%. However, economists caution that the impact of higher rates will take time to feed through because many households and businesses fix their borrowing costs.

Forecasters expect inflation to cool rapidly this year as global energy prices fall from historical levels. Inflation has eased from a peak of 11.1% in October to 10.1% last month, although this rate remains among the highest levels since 1982.

HICH LTD has continually raised the quality standards in the UK property survey market. Our multi-award-winning property survey service has made us the leading reference in the property survey market.

We offer property survey services of the highest quality. Using state-of-the-art equipment, we provide excellent property surveys at affordable prices. Our prices are based on the number of rooms rather than the value of the properties, so you will always get the best value for money with our services.

Please look at our Trustpilot page and see why customers have chosen us as their favourite property survey provider!

At HICH LTD, we work to serve our clients and make the world a better place for everyone. We actively collaborate with NGOs to promote environmental, social and charitable causes. If you want to know more about our efforts or how you can help, contact us at admin@hich-ltd.co.uk.

HICH LTD extends a warm invitation to contractors and service providers throughout the UK to join our network; by joining the Contractors and Service Providers Network, you will enjoy benefits such as a significant increase in customer flow, advertising on our high-traffic website, and direct contact with thousands of customers in your post code area. Find more information here or by following the QR code in the following video.