LiveMore comments on base rate rise to 5.25%

03 August 2023

Simon Webb, managing director of capital markets and finance at LiveMore, said: “With both the US Federal Reserve and European Central Bank raising their respective base rates by 0.25% last week, the Bank of England has followed suite. In the UK this is now at a 15-year high, with a 5.25% base rate last seen during the global financial crisis in February 2008.

“With inflation starting to fall materially in the US and to a lesser extent the UK, hopefully the Bank of England can now pause its rate increases. Financial pressures continue to increase for many and there are 1.6 million fixed-rate mortgages due for refinancing in the next 12 months, not to mention the impact that 14 consecutive base rate raises is having on those borrowers with variable rate mortgages. It’s also businesses that are being impacted by high borrowing costs with the number of insolvencies rising.”

“Of note was that two members of the MPC voted to raise the rate by 0.5%, with one voting no rise. Are we beginning to see a diversion of opinion across the members? What we do know is that the performance of the economy, inflation figures and other economic metrics will be key in deciding the next rate move.”