Criticism: M&S chairman Archie Norman
Marks & Spencer chairman Archie Norman has dismissed the Bank of England’s aggressive interest rate hikes as ‘completely ineffective’.
The most intense cycle of interest rate increases since the late 1980s has not contributed “very much” to cooling price increases, he said.
Falling inflation levels have little to do with the bank’s medicine and more to do with broader economic trends, said Norman, one of Britain’s most respected bosses.
He added that central bankers had only a “marginal effect” in helping inflation fall to 4 percent in January from a peak of 11.1 percent in October 2022.
The benchmark interest rate has been hiked fourteen times since December 2021, hurting millions of borrowers. Since last autumn, this has been kept at 5.25 percent.
Norman said: “What we have proven over the last three years is that monetary policy is completely ineffective. There is a marginal effect, but inflation was driven by global macro prices. It had no impact on the gas price. It had no real impact on the price of food.”
“We probably sometimes listen a little too much to central bankers,” the former MP told Bloomberg.
There are new hopes for a cut after Jeremy Hunt outlined a brighter outlook for the economy in last week’s budget.
As Prime Minister Rishi Sunak prepares to go to the polls later this year, the Conservatives are hoping for a rate cut in the coming months.
Norman’s comments came days after its chief executive, Stuart Machin, warned that doing business in Britain “is like walking up an escalator with a backpack on your back”. He argued that shops will be forced to raise their prices if action is not taken to help the High Street with heavy costs such as business rates.