As the interest rate decision approaches on 2 November, Giles Hutson, CEO of Insignis Cash Solutions, comments on the risks of the current environment and why a hike is due: “The Bank of England should increase UK interest rates by 0.25% as the current interest rate environment continues to fuel a consumer finance bubble, and penalise saving and investment long after the benefits have worked their way through the system. “More broadly, rates need to rise to avoid the danger of families factoring a low interest rate climate into their long term financial planning, for example when deciding the level of mortgage payments they can afford. “A hike in November would be the first increase in 10 years and act as a shot across the bow to remind people that low interest rates won’t last forever. The low rate climate has a finite life in terms of the benefits it brings to society. Once every mortgage has been refinanced at the lower rates, and people have taken advantage of low rates to borrow, we’re left with savers whose cash deposit returns have been crucified. “That said, a single rate rise of 0.25% alone is unlikely to make a significant difference to savers. There are two factors which will have a greater impact on their returns; the first is increased competition in the banking market, and the second is savers overcoming their own inertia and more actively managing their cash. “Given that recent UK inflation levels have hit 3%, the only reason for not raising rates is the growing uncertainly around Brexit negotiations. However, a rate rise now will create fire power, leaving something in the tank if we end up in a hard Brexit situation. “Looking ahead to 2018, it’s difficult to say whether a hike in November would be the first of a number. This will only become clearer when we see resolution on the question of a Brexit transition period.”