Architas' Rock: Rate hikes would be ultimate policy error

Raising interest rates too fast this year in an attempt to stem inflation would be the ‘ultimate policy error', says Caspar Rock, CIO at Architas.

Expectations across the market of interest rates going up earlier this year came in response to data recently released showing CPI in December unexpectedly surged to 3.7%, up from 3.3% in November. Rock says: "There was a shocking inflation figure; everyone bumped up expectations of interest rates going up earlier this year, but I don't agree with that." He says out of the 3.7% figure, around 2% is tax-related, while the remainder is largely driven by commodity prices, both of which would be unaffected by any increase in interest rates. "This time next year, everything else being t...