Less than two in five investors have faith in BoE’s decision making

New research has found that only 39 per cent of UK retail investors trust the Bank of England’s decision making, and 42 per cent think the central bank is right to continue its rate hiking cycle to combat inflation.

The survey from HYCM quizzed 964 UK-based retail investors, all of whom have investments in excess of £10,000, excluding the value of their savings, pensions and residential property.

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Over a third of investors say rising rates have had a negative impact on the value of their investments. Meanwhile, 46 per cent believe further rate hikes will damage the UK’s economic growth.

“It’s clear that the Bank of England’s rate hiking cycle has had a significant impact on investor sentiment towards the central bank,” said Giles Coghlan, chief market analyst consulting for HYCM.

“However, despite some losing faith in the bank’s decision making, many investors still recognise that more action may be needed to curb the inflationary pressures that remain, such as the recent wage growth data.”

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In July, UK wages outstripped the rate of inflation for the first time in more than 18 months. High wages are a major factor in fuelling high inflation in the UK, according to 46 per cent of investors.

“For much of this year, there has been a general consensus among economists for the need for further rate hikes to curb inflation, which is why the GBP has enjoyed month-on-month growth in 2023,” said Coghlan. “That said, with the research showing that fears about growth are creeping into investors’ minds, GBP weakness could be on its way now that the Bank of England has paused its hiking cycle.”

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