At midday today, the Bank of England published its latest interest rate decision and also the minutes of that decision. Below are a selection of alert_responses from small businesses around the UK.
12 responses from the Newspage community
"Even though a small increase of 0.25% may be considered chicken feed by some members of the Monetary Policy Committee, they're conscious that it's a path that must be walked very carefully as we still don’t know how the economy will shape up come the end of the furlough scheme. "Despite inflation rising fairly sharply in recent months, the Bank of England does not want to act too quickly and make rash decisions that will then take longer to recover from if they need to be undone."
"When it comes to interest rates, the Bank of England, like every other Central Bank around the world, is committed to let the economy run hotter for longer, as it is looking to see some inflationary pressures as a sign that the economy is growing quickly. With this philosophy, there is no way the MPC will raise rates any time soon. They will do their best to warn around inflation if it does start to perk up, but words and action are two very different things. "The UK economy is very quickly approaching a Goldilocks-style scenario, which is a combination of three very powerful forces. You have the re-opening of the economy that continues to stir the "animal spirits" among consumers who are looking to go out and spend; you have high savings rates across the economy with the Household Savings Rate at 19.9% in Q1 of this year; and finally, you have the continued falling of mortgage rates, which are effectively tax cuts for borrowers. All of these working together should see very strong growth for the UK in the short to medium-term."
"The Bank of England is aware that there is the potential for a house of cards, or domino effect, if interest rates were to be increased at present, so it's no surprise they were left at their current level. "For consumers, forward planning has never been more important, including managing and fixing credit costs, such as mortgage and loan accounts. We can't control the Bank of England or the economy, but we can prioritise and manage our own personal finances."
"The inflation we have currently is the economic equivalent of long-COVID. It has not been caused by an overheating economy but by depressed output. It will settle down once the economy is back to its original output capacity. Raising interest rates will only hinder our economic recovery and it's highly unlikely for some time yet."
"The past 18 months have taught us not to take anything for granted; that said the economic outlook looks strong for the second half of the year. We are already seeing pent-up sales being made and this will continue throughout the year. "Despite the inflation figures, I cannot see the Bank of England raising interest rates anytime soon. The priority will be to ensure strong and prolonged growth to the economy."
"While inflation has risen sharply, this is due to the unlocking of the economy rather than a true reflection of inflationary pressures as there's still slack in the economy overall. "That said, it's likely that both Brexit and COVID will start to bite during the second half of the year so I'd expect to see a deterioration in some sectors especially as the furlough scheme comes to a close. While the Bank of England could raise rates off the back of the rate of inflation, it won't as we've no idea yet what the true impacts of Brexit and COVID are."
"The current low-interest rate environment looks set to continue for some time yet and there is nothing to suggest that there will be any rise this year at least. "The economy is still on highly volatile ground and the end of the furlough scheme may yet see a spike in unemployment. "That said, as we tentatively emerge from the midst of the pandemic and distancing rules ease, the economy will continue to splutter back to life. "This splutter will inevitably become a roar of activity and economists will have a hawklike eye on inflation as a guide to when interest rates will eventually need to rise. "It will be fascinating to see how far the Monetary Policy Committee is prepared to let inflation rise before acting."
"Frankly it all depends on what happens with COVID infection rates when kids go back and no new vaccine resistant variants knocking us for six. "If the economy is allowed to remain open growth is still likely to continue with 18 months of pent-up demand still working its way through. "Plus, if the double jabbed no longer need to isolate, this will hopefully end the pingdemic this month which has caused real staffing headaches for many businesses. "Ballooning infection and death rates though still could force either a full or lockdown-lite which would undoubtedly cause issues if businesses are forced to close again."
"It's a delicate time for people in most areas of the economy. Provided the Bank of England doesn't increase interest rates, which will make our lives even harder, our country and economy can start to heal as people get back to work."
We've just recorded our best July yet, so either we're very lucky or the economy has already improved. Most of the employers that we are speaking to are more concerned about the increasing skills shortage and investment needs to be ramped up in this area if we want to continue our recovery.
"Brexit and post-Covid economic impacts have been masked so far by the furlough scheme, which will show the true state of unemployment once it ends next month. "The demand driven by the post-lockdown consumer need to get out, be out and spend will wane and a rise in interest rates will simply accelerate a cut in consumer spending habits. So I can’t see that a rise at this time will be viable until we have more stability in our economy."
"Rates will remain fully unchanged, and in fact, the next few years will see financial repression, with interest low or even below inflation to reduce high levels of debt. "Interest rates will never track inflation, which is currently high, headed towards around 2-4 percent. "No government will become fiscally responsible anytime soon. it's too hard and the political risk too great."