The chief executive of Barclays has warned that homeowners and renters could face a “huge” shock if interest rates rise. Speaking at the Bank of England’s annual conference in London, Jes Staley said that while the Bank had held interest rates at a record low of 0.75%, a hike would not be good news for consumers.
“We should not understate what could happen with a material increase in interest rates, if in fact that were to take place, that would be a huge shock to the housing market and to those who are currently renting, and those who are buying,” he said.
Staley said that the Bank of England should be conservative about raising rates because of the potential impact on consumer finances. He noted that the market’s long-term expectation of the Bank raising rates was “misplaced” and that an increase in rates would be a serious challenge for households.
He said that any increase should be “meaningfully lower than a level markets expect,” and urged the Bank of England to focus on supporting households. In light of rising inflation, some economists have urged the Bank to raise rates, while others argue that it should hold fire until economic conditions are more secure.
