Several CEOs and Directors from firms local to the West Midlands joined in the conversation; chaired by Graeme Chaplin, the Bank of England’s Agent for the West Midlands and Oxfordshire regions.
The sessions are formed to discuss the Bank of England’s economic and financial policy making, affecting key senior stakeholders across various industries. Edd Hollier, Senior Investment Director, and Jack Peglar, Senior Research Analyst at EFG Harris Allday joined the discussion, highlighting key investment themes taking place throughout previous months. Louise Delaney, Client Relationship Officer at EFG Private Bank also joined – discussing key considerations from her international client base.
In recent news, the surprise halt in interest rate increases led to much debate in the UK, after the rate had previously increased 14 times since the end of 2021. An increase in the base rate typically leads to more expensive mortgages – whilst unfavourable to borrowers, the rising interest rates are designed to help reduce consumer spending and inflation.
Inflation was 6.7% in August, a drop from July levels, despite the rising petrol and diesel prices. Although this has declined from its 11.1% peak in 2022, levels remain well above the Bank target of 2%.
The Bank interest rate is currently the highest level it has been for the last 15 years, higher than both Europe and the US. With the base rate remaining unchanged at 5.25% we hope to see more positive progress, with inflation continuing to fall throughout the months ahead.
Savings
High street banks and building societies have been pressured into offering higher interest rate rises, although many offers are still unable to keep up with inflation – meaning the buying power of cash savings is falling in real terms. The majority of Harris Allday clients are still maintaining their objective of growth, seeking well-diversified investment portfolios to combat some of the disadvantages seen in fixed-savings accounts.
Mortgages
High interest rates mean that mortgage holders may see a decline in their disposable income. Many mortgage holders in the UK opt for fixed-rate deals, although some are still on standard variable rates, meaning that the change in interest rates will impact their monthly payments almost immediately.
Those looking to remortgage to a new fixed deal in 2023 may need to pay much more than those who had fixed deals from over 12 months ago.
The team enjoyed discussing key policies with the Bank of England and Senior stakeholders across the region. We look forward to joining future events with Greater Birmingham Chambers of Commerce.
If you would like to speak to one of our Investment Managers, to review your savings and investments, please contact us at enquiries@efgha.com. A member of the team will be happy to contact you.
For further details, a recent article published by the BBC containing links to the Business team’s report, and more information for mortgage holders can be found here:
https://www.bbc.co.uk/news/live/business-66863917