oday it’s the Swedish Riksbank’s turn to turn the screws on borrowers and businesses with a one percentage point hike in interest rates.
Tomorrow, the US Federal Reserve may well follow suit in what would, of course, be a much bigger decision.
All of this provides a fascinating backdrop for Andrew Bailey and his fellow Monetary Policy Committee members as they meet this week ahead of their delayed rate decision on Thursday.
With increases of 100 basis points increasingly the “new normal”, the chances of the MPC exceeding half a point diminish. Markets are now pricing in a full two percentage points by Christmas, which would take the Bank of England’s benchmark rate to 3.75%.
Savers will celebrate the end of their 17 years of misery with rates finally climbing off the floor – although they are still far behind the cost of living.
At least they should be celebrating. But billions of pounds of cash are still stuck in ‘legacy’ accounts with interest rates barely above zero.
One of Britain’s most powerful banking bosses, NatWest CEO Alison Rose, spoke today about how higher rates benefit banks. Good for them. But there will be problems if this good fortune is not quickly passed on to the millions of savers who have seen the value of their savings diminish.
This will only hasten the decline of the main street dinosaurs as more nimble rivals sniff out their opportunity.