23rd  March 2023

ICAEW responds to BoE interest rate decision

Responding to today’s interest rate decision by the Bank of England’s Monetary Policy Committee (Thursday 23 March 2023), Suren Thiru, Economics Director at ICAEW, said:

“The decision to raise interest rates looks a little ill-advised against a backdrop of economic uncertainty and financial market volatility.

“The Bank of England remains behind the curve on interest rates. It was too late to tighten monetary policy when inflation surged, and now it’s still hiking rates despite a flatlining economy and financial market turbulence.

“While we’re already seeing the negative impact of rapidly raising rates on financial stability, the lagged impact on the real economy means that damage to households and businesses is yet to be fully felt.

“With a flagging economy and lower energy costs still set to drive a significant fall in inflation this year, despite February’s surprise increase, the case for cutting interest rates is only likely to grow.”

ENDS