Exclusive: Confidence in Bank of England hits rock bottom as investors call Bailey’s hiking cycle ‘wrong’
Investor confidence in the Bank of England is close to rock bottom as the country braces itself for an eighth successive hike in interest rates tomorrow.
Nearly three in four investors feel the Bank had gotten its hiking cycle “wrong”, though respondents were sharply divided over whether rises had come too fast or too slow, according to fresh data that was exclusively shared with Morning Wire today.
With inflationary pressures still building in the economy, 37 per cent said that monetary tightening had been too fast versus 36 per cent who thought rate-setters should have acted sooner, a Censuswide poll for InvestingReviews.co.uk found.
Decision tomorrow
Economists expect the Bank of England to increase its base rate by 75bps to 3 per cent when it meets tomorrow morning, which would amount to the single biggest rate rise in its 25-year handling of monetary policy.
The previous two meetings have seen increases of 50bps.
Despite a hardening position at the central bank, there remains widespread fears that inflation – currently at 10.1 per cent – will continue to surge against a backdrop of conflict in Ukraine.
Almost half (44 per cent) thought that inflation would rise to 11 per cent or above — the Bank of England’s previously forecasted peak.
With borrowing costs nudging up, most believe a hard landing for the economy is inevitable, with 83% predicting a recession and just 8 per cent saying it can be avoided.
“The Bank of England faces a difficult balancing act as it tries to cool inflation without tipping the country into a deep recession,” said InvestingReviews CEO Simon Jones.
“The public is almost equally split on whether the current hiking cycle has been too fast or too slow,” he told Morning Wire
“On the other hand, there doesn’t seem to be too much disagreement about the direction the country is heading. A huge majority believe the die is cast and a recession next year is now unavoidable,” Jones added.
The Bank of England has been approached for a comment.