LGIM's Hodges: UK rate hike would be lunacy

LGIM's Richard Hodges believes the Bank of England's Monetary Policy Committee (MPC) would be "lunatics" to raise interest rates in May as it will put the UK at risk of a double-dip recession.

Hodges, manager of the £1.5bn Dynamic Bond trust, say it would be a “policy error” to raise rates this year. He warned doing so would hit the  fragile housing market hard.  Hodges believes rates will not rise above 2% in 2012 and is reflecting this view by taking short-term UK interest rate exposure. “The reason I have added to interest rate risk through zero to one-year duration is because UK interest rates got massively oversold,” says Hodges. “The short-sterling futures contract, the 90-day UK interest rate future for 2012, started discounting interest rates in the UK would b...