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Bank of England must 'do the right thing' and cut rates in summer

 

April 17, 2024 (Investorideas.com Newswire) The Bank of England must not be tempted to use a smaller-than-expected drop in inflation in March to delay interest rate cuts further, warns the CEO of one of the world's largest independent financial advisory and asset management organizations.

The warning from deVere Group's Nigel Green comes as the UK's annual inflation rate fell in March for a second consecutive month, dropping to 3.2%.

He says: "The latest data is slightly higher than expected, but the overall outlook for inflation is positive.

"We hope that, despite the last stretch to hitting the Bank of England's 2% target being harder and slower, overly cautious officials will not see this as yet another reason to further delay rate cuts.

"They must begin to bring down the historically high rate of 5.25% from June onwards. No ifs, no buts."

Bank of England governor Andrew Bailey told an International Monetary Fund event in Washington: "In the UK we're disinflating at what I call full employment...Our judgement with interest rates is 'how much do we need to see now to be confident of the [disinflation] process'."

The deVere CEO notes: "Mr Bailey and his team need to hold their nerve and be proactive. This summer is the time for the central bank to act decisively and promptly.

"The Bank of England failed with its inaction at the start, passively standing by for too long when prices were already starting to surge.

"It mustn't fail now with adherence to a restrictive monetary policy which is exacerbating the challenges faced by firms and households across the United Kingdom."

Speaking last month, Nigel Green told the media: "Households stand to benefit significantly from a rate cut, as lower mortgage rates translate into reduced monthly payments, freeing up disposable income for consumption and savings.

"Additionally, lower borrowing costs make homeownership more accessible for aspiring buyers, thereby stimulating demand in the housing market.

"By easing financial burdens on households, a rate cut would bolster consumer confidence and spending, driving economic growth from the ground up."

Investors, too, have much to gain from a shift in monetary policy towards accommodative measures.

Lower interest rates tend to fuel demand for risk assets, such as equities, as investors seek higher returns in a low-yield environment.

As equity markets thrive on the prospect of easier monetary conditions, "a rate cut by the BoE would help drive stock prices and unlock investment opportunities across various sectors."

The deVere CEO concludes: "The Bank of England mustn't be tempted to delay rate cut any longer. They must do the right thing and cut from June onwards."

e: george@priorconsultancy.co.uk
t: +44 207 1220 925
Twitter: @PriorConsults

deVere Group is one of the world's largest independent advisors of specialist global financial solutions to international, local mass affluent, and high-net-worth clients. It has a network of more than 70 offices across the world, over 80,000 clients and $12bn under advisement.

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