– John Hudson, Senior Investment Advisor at HULT Private Capital
DUBAI and LONDON, UNITED KINGDOM – February 3, 2022 – All eyes are on the Bank of England this week in anticipation of further rate hikes from the powers that be in the City. With inflation at a 30 year high, British households are facing mounting pressure from soaring utility prices and the escalating cost of groceries. In December 2021, it was declared that the official inflation rate now stands at 5.4%, highs that have not been seen since 1992, but the news came with a stark warning from the Bank of England; this may not be the end, and rates of 6% may be on the horizon.
Economists across the City are expecting interest rates to rise, doubling its existing value, and bringing it to 0.5%. In a move speculated to curb runaway inflation levels, experts are still concerned for the future of the economy if Threadneedle Street does not commit to a succession of interest rate rises over the year ahead. John Hudson, Senior Investment Advisor at HULT Private Capital thinks the move is a double-edged sword, “as an economy, we need interest rates to rise, but as consumers and homeowners, the rate hike is likely to put thousands of middle and working-class families under greater financial pressure with mortgages and pension pots set to be hardest hit. Many of our clients have had the foresight to prepare for eventualities such as these having lived through financial crises, but many are now providing much-needed support to their families to help them weather the proverbial storm.”
Hudson is not alone in his forecasts, as experts admit that the rate of inflation has not been growing in unison with salary rises. HULT Private Capital has been supporting an increasing flurry of investors from their London offices, with many people questioning how to best protect themselves for the future. John Hudson explained: “even final salary pensions with the typical 2.5% inflation protection built-in will be of little consolation in such uncertain times. The importance of ensuring one’s hard-earned money continues to work hard in the face of economic adversity remains our priority, but it is now also at the forefront of the minds of many bewildered investors.”As we await the update from the Bank of England on Thursday, the real question is whether the Monetary Policy Committee’s intentions are to truly limit losses by reducing the balance sheet with a series of commitments in the longer term.
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