Almost half of investors want interest rates to rise by 0.5% or more

We share the findings of the latest interactive investor flash poll.

Almost half (48%) of investors want the Bank of England to raise interest rates by 0.5% or more on Thursday, according to a flash poll by interactive investor, the UK’s second-largest DIY investment platform.

We haven’t seen a 0.5% change to interest rates in more than a decade, and that was during the financial crisis in March 2009, when interest rates were going down, not up. So, these are punchy views.

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The survey of 1,249 interactive investor website visitors between 13 and the morning of 14 June, found that a third (33%) of respondents want the Bank to up the base rate by 0.5%, while 15% said the rate hike should be higher. Some 27% support a 0.25% rate rise.

There is little appetite for a cut to interest rates among the sample, with only 2% claiming a 0.5% cut would be the best course of action, while 1% support a 0.25% reduction.

But 13% of respondents believe the Bank should keep the base rate as is at 1%, while 8% said they were unsure.

Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “The Bank of England is expected to hike interest rates for the fifth consecutive month in a row on Thursday, and it is interesting to see that almost half of respondents to our survey support a rate rise of 0.5% or more – that’s pretty punchy! The scale of the inflation challenge is real, and higher interest rates should result in a further uptick in savings rates from rock-bottom levels, which would benefit savers, if not borrowers.

“Faced with inflation running at a four-decade high of 9% and predicted to hit double digits soon, the Bank is under pressure to take decisive action without triggering a recession. However, a rate rise is a blunt monetary policy tool to address inflation as the main sources of inflation, including Russia’s devastating invasion of Ukraine, shifting demand and bottlenecks to supply following the pandemic and China’s zero Covid policy, fall outside the Bank’s sphere of influence.

“As the cost-of-living crisis spirals, it is important to regularly review your spending habits to help ensure that you are living with within your means. It is easier said than done for those living on the breadline.”

Lee Wild, Head of Equity Strategy, interactive investor, says: “After a decade of low interest rates, borrowing costs are on the rise, but the rate of increase is the subject of much debate and opinion is divided. Policymakers must decide whether to hike rates aggressively to get rampant inflation under control, while at the same time avoiding a full-scale recession. There doesn’t appear to be a right answer at the moment, but it’s understandable that, after years of paltry returns on their cash savings, many people will be supportive of higher bank rates.”