Less than two in five retail investors in the UK (39%) have faith in the Bank of England’s (BoE’s) decision making, new research by HYCM has revealed.

The online trading provider also found that less than half (42%) think the central bank is right to continue its rate hiking cycle to combat inflation.

HYCM commissioned an independent survey of 964 UK-based investors, all of whom have investments in excess of £10,000, excluding the value of their savings, pensions and residential property.

According to 46% of investors, high wages are a major factor in fuelling high inflation in the UK. In July, UK wages outstripped the rate of inflation for the first time in more than 18 months.

HYCM also quizzed investors about the BoE’s interest rate hiking cycle and found that over a third (35%) believe rising rates have had a negative impact on the value of their investments. Meanwhile, 46% suggested further rate hikes will damage the UK’s economic growth.

Despite this, only 42% of investors said they monitor the BoE’s monetary policy decisions to inform their investment activities, while 34% have shifted their investments towards assets or markets that are less sensitive to interest rate hikes over the past 12 months.

Chief market analyst for HYCM, Giles Coghlan, said: “It’s clear that the BoE’s rate hiking cycle has had a significant impact on investor sentiment towards the central bank. However, despite some losing faith in the bank’s decision making, many investors still recognise that more action may be needed to curb the inflationary pressures that remain, such as the recent wage growth data.

“For much of this year, there has been a general consensus among economists for the need for further rate hikes to curb inflation, which is why the GBP has enjoyed month-on-month growth in 2023. That said, with the research showing that fears about growth are creeping into investors’ minds, GBP weakness could be on its way now that the Bank of England has paused its hiking cycle.”

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