Norman: Interest rate hikes were ineffective

MARKS & Spencer chairman Archie Norman has dismissed the Bank of England’s aggressive interest rate hikes as ‘totally ineffective’.

The most intense cycle of rate rises since the late 1980s didn’t do ‘very much’ to cool price increases, he argued.

Falling inflation levels have little to do with the bank’s medicine and more to do with broader economic trends, Norman, one of the most well-respected bosses in Britain, said. He added that central bankers only had a ‘marginal effect’ in helping inflation fall to 4pc in January from its 11.1pc peak in October 2022.

The benchmark rate was increased 14 times since December 2021, heaping pain on millions of borrowers. It has been held at 5.25pc since last autumn.

Norman said: ‘What we’ve proved in the last three years is that monetary policy is totally ineffective. There’s a marginal effect but inflation was driven by global macro prices. It had no bearing on the price of gas. It had no real bearing on the price of food.’

‘We probably sometimes listen a bit too much to central bankers,’ the former MP told Bloomberg.

There are fresh hopes of a cut after Jeremy Hunt detailed a brighter outlook for the economy at last week’s Budget.

As Prime Minister Rishi Sunak prepares to go to the polls later this year, the Conservatives will be hoping for a rates cut within the next few months.

Norman’s remarks came days after his chief executive Stuart Machin warned doing business in Britain is ‘like running up a downwards escalator with a rucksack on your back’. He argued that shops will be forced to put up prices if there is no intervention to help the High Street with tough costs like business rates.