Ahead of Wednesday’s inflation data, UK newswire, Newspage, asked financial services experts what they expect to see and what the ramifications could be for the base rate, businesses, mortgage borrowers and the economy if inflation once again proves stubborn.
The week ahead is a hugely significant one for the rest of 2023 as inflation data is now so pivotal for the Bank of England (BoE) and the government.
The finance minister keeps repeating the British public “must stick to our guns” which can be roughly translated as the Rishi Suank’s government ‘have no clue what to do.”
Joe Garner, Founder & Managing Director at Joe Garner Consulting said, “Ahead of Wednesday’s inflation data, UK newswire, Newspage, asked financial services experts what they expect to see and what the ramifications could be for the base rate, businesses, mortgage borrowers, the economy and property market if inflation once again proves stubborn.
“The markets are betting on an interest rate rise, which means we are potentially looking at a rise in inflation or, at the very best, that it stays as it is.
“As we enter the Summer months, where traditionally we see an increase in spending, it is likely that the base rate will hit 5.25%, maybe 5.5%, before the end of the year.
“The finance minister repeating ‘we must stick to our guns’ can be roughly translated as ‘we have no clue what to do’ backed up by the PMs desire to be popular, only rivalled by that of David Brent. It is time to buckle up for a trip back to the 90s.”
Ross McMilla, Owner/Mortgage Advisor at Blue Fish Mortgage Solutions added, “The week ahead is a hugely significant one for the rest of 2023.
“The inflation data has now become so pivotal and seemingly the only barometer of concern to the Government and Bank of England (BoE) that this week’s numbers could determine the fate of the UK property and mortgage markets for the rest of 2023.
“If the numbers are disappointing, then the time to call for the lifeboats may well be upon us and a worrying few months will be ahead.
“However, if we can see a similar downward pattern to the US, then whilst choppy waters remain likely, this should at least give hope to mortgage holders that the relentless pounding from the Bank of England over recent months may diminish sufficiently to allow borrowers the chance to breathe a little.
“Given the one-track mind of those pulling the rate policy levers, stagnation in the inflation rate will almost certainly see average fixed mortgage rates screech over 7% for many, which is a scenario we must all hope we avoid.”
Ranald Mitchell, Director at Charwin Private Clients said, “Hopefully, Wednesday’s inflation data will present a more positive outlook and start to ease back following recent base rate increases. If it doesn’t, we could well see further rate rises and more pain for mortgage borrowers and businesses.
“If the base rate increases fail to impact inflation as expected, it is likely the Government will introduce changes to fiscal policy, with increases in income tax in an Autumn budget a likely option. Tough times are ahead, but inflation must come down.
“With stubbornly high inflation, it seems like we have to break the economy to fix it.”
