March 2023 interest rate hike: Positive Money response

March 23, 2023 

Responding to the Bank of England’s decision to raise interest rates by a further 0.25% to 4.25%, Fran Boait, executive director of research and campaign group Positive Money said:

“With the recent collapse of Silicon Valley Bank and rescue of Credit Suisse we are beginning to truly see the impact of central banks’ interest rate hikes play out. Since the last crash the financial system has continued to build up huge levels of debt and may struggle to sustain these sudden jumps in interest rates. 

“Tightening monetary policy does little to address the chief drivers of inflation, which are supply side factors like scarcer energy and food, as the Bank of England itself recognises. The Bank of England should be prioritising their objective for financial stability, rather than causing more damage trying to fight inflation with the wrong tools.”

Notes

1. The Bank of England has said non-domestic factors, such as the war in Ukraine raising global energy and food prices, accounted for over 70% of inflation in 2022. Domestic factors — profit margins, labour costs and, to a lesser extent, taxes — accounted for the remaining 30%, yet according to the Bank this may even be an overestimate of domestically generated inflation: https://www.bankofengland.co.uk/speech/2023/march/swati-dhingra-remarks-on-cost-of-living-crisis-and-inflation-at-the-resolution-foundation

2. Positive Money campaigns for a money and banking system which supports a fair, democratic and sustainable economy. Set up in the aftermath of the financial crisis, Positive Money is a not-for-profit company funded by charitable trusts and foundations, as well as small donations from its network of over 65,000 supporters. www.positivemoney.org

3. For more information or to arrange a briefing/interview with a spokesperson, please contact press@positivemoney.org.uk or call Simon Youel on 07817765517.