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Hawkish Bank of England at odds with struggling economy, ICAEW says

Author: ICAEW

Published: 15 Dec 2023

Suren Thiru, Economics Director at ICAEW, responded to today’s interest rate decision by the Bank of England’s Monetary Policy Committee (Thursday 14 December 2023):

“Keeping interest rates on hold once again is further confirmation that the Bank of England has completed this hiking cycle, providing respite to households and businesses.

“Though interest rates have peaked, the long time lag between rate rises and its effect on the real economy means that the full impact of this prolonged period of monetary tightening has yet to be fully realised.

“The Bank’s rhetoric on rates is unnecessarily hawkish given slowing wage growth and a deteriorating economy, raising fears that it will keep rates high for too long, unnecessarily damaging an already struggling economy.

“With inflation trending downwards and the economy at risk of recession, the case for interest rate cuts is likely to grow over the coming months. Against this backdrop, the Monetary Policy Committee could well start loosening policy by next summer.”


Notes to editors:

Contact: ICAEW media office media.office@icaew.com, tom.mackintosh@icaew.com or 07866 853 841