02 February, 2023, LONDON –

A panel of experts are in agreement that the predicted base rate rise on Thursday is the right decision to take. However, they are divided on what strategy the Bank of England (BoE) Monetary Policy Committee (MPC) should take for the rest of the year.

The personal finance comparison site finder.com compiled an expert panel consisting of 11 academics, economists, mortgage and savings experts, and asked them for their predictions and opinions on the state of the UK economy and the Bank of England’s approach.

The panel believes today’s rise is the right decision

When the panel was asked if they agreed that their prediction of a base rate rise was the correct decision by the BoE, 8 of the 11 experts (73%) said it was.

Nitesh Patel, strategic economist at Yorkshire Building Society, explains: “The BoE will be worried about overdoing the tightening, especially if it thinks inflation has peaked.”

Kate Anderson, deputy editor at finder.com, added: “The BoE doesn’t have many tools available to tackle inflation. A rate rise is one of its only options to ease inflationary pressure.”

Despite all panellists thinking rates will rise, 2 (18%) didn’t agree that it was the right decision.

Rob Peters, Founder of Simple Fast Mortgages, said: “I would disagree but the BoE really doesn’t have much choice. They are effectively using a blunt tool to tackle a complex problem. With much of the reason for inflation coming from global issues related to fuel and commodities, hiking up interest rates isn’t really going to have much effect.”

Should the MPC be dovish or hawkish for the rest of 2023?

The Bank’s MPC has a difficult job balancing the base rate against a cost of living crisis and high inflation, so it was interesting to see the panel split on how the bank should act for the rest of the year.

When asked if the bank should be dovish (lower rates to encourage growth and borrowing) 6 of the panellists (55%) said this would be their approach.

Jon Ostler, CEO at finder.com, said: “With a weak economy and employment market there is a real danger of overdoing monetary tightening and we could end up in between a rock and a hard place and another hard place!”

David Hollingsworth, associate director at L&C Mortgages, said: “Reaching the peak of rate rises sooner rather than later should help borrowers adjust to the new rate environment and how it impacts them.”

When asked if the Bank of England should be hawkish (increase rates to curb inflation), 4 panellists (36%) thought this would be the best approach.

Dr Luciano Rispoli, senior lecturer at the University of Surrey, said: “The large inflationary shock experienced in 2022 can only be counteracted by aggressive hawkish BoE monetary policy actions. Thus, I believe MPC actions can only go [in] one direction.”

Stephen Sillars, content manager at Chip, said: “The UK needs to get a handle on inflation so it’s not really in a position to stop raising interest rates, but the Bank of England can’t ignore the fact this may push the economy into more of a downturn than already predicted. It’s a delicate balance.”

The Bank faces a difficult decision, though, as explained by Giles Coghlan, chief market analyst at HYCM: “The head says grind inflation into the ground and raise interest rates hawkishly. For the longer-term health of the economy, historically speaking, this is the best thing to do. However, the heart says go a bit easy as people are struggling and many people striking are only doing so as they can’t meet basic needs.”

For more detailed information on the panel and their thoughts and predictions, visit: https://www.finder.com/uk/base-rate-survey

If you are interested in appearing in the next panel, please email: matt.mckenna@finder.com