Bank of England criticised over interest rate rise
The Bank of England is being criticised from both sides of the political spectrum over today’s interest rate rise.
The IPPR, the progressive thinktank, warns that the Bank is “tightening the screws too much” by lifting interest rates to a 15-year high of 5.25% today.
Carsten Jung, senior economist at IPPR, suggests rates could be more than one percentage point too high.
The UK economy is weakening. The labour market is slowing down, and productivity is falling. Increasingly there is a realisation that the Bank of England is already overdoing it.
By raising interest rates to 5.25 per cent, the Bank is tightening the screws too much and causing excessive harm for households and businesses. Interest rates might well be more than a percentage point too high now.
Instead of further rate rises, we need a more balanced approach to tackling Inflation, using more government support. Countries like Spain have kept energy prices lower, temporarily limited rent increases and tackled excessively high profits through taxation. Their inflation rate has recently fallen back to target. The UK should take inspiration from their example.
The pro-free market Institute of Economic Affairs, is also concerned that the Bank is overreacting.
Julian Jessop, economics fellow at the IEA, says:
The Bank’s decision to raise rates again, albeit by just a quarter point, suggests that the MPC is still looking in the rear view mirror.
Money and credit growth have already slowed sharply and other leading indicators of inflation have weakened, including commodity prices and evidence from business surveys.
It would have made more sense to pause to assess the impact of the large increases in rates that have already taken place, as other central banks have done.
The UK economy is like a frog slowly being cooked by ever higher interest rates. By raising the temperature further now, the Bank risks doing too much and, once again, only realising its mistake when it is too late.
The Bank’s forecasts suggest that the backdrop to the election next year will be rising unemployment, average increases in mortgages of around £3,000 as households move off fixed-rate deals, and weak GDP – with growth for 2024 the weakest for an election year since 1992.
","elementId":"3afa2526-5631-439a-872b-ae97cb6425cb"},{"_type":"model.dotcomrendering.pageElements.TweetBlockElement","html":"","url":"https://twitter.com/TorstenBell/status/1687088966162423808","id":"1687088966162423808","hasMedia":false,"role":"inline","isThirdPartyTracking":false,"source":"Twitter","elementId":"95765640-bcbc-4d3a-a038-2c9cf77fa525"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"What is the @bankofengland saying it will take to get inflation down? A 350,000 rise in unemployment pic.twitter.com/RdxUhRks8e
— Torsten Bell (@TorstenBell) August 3, 2023
That may take the shine off today’s prediction that inflation may halve during 2023, meaning the PM would hit one of his targets.
","elementId":"b7066b58-5ed8-4049-bc9b-39ee4f5aa0d1"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"James Smith, research director at the Resolution Foundation, said:
","elementId":"7b3b856b-5e9a-4bc6-abfb-2ea16beaccb6"},{"_type":"model.dotcomrendering.pageElements.BlockquoteBlockElement","html":"\n","elementId":"93e8058f-272e-4273-b342-30aeeb278acc"},{"_type":"model.dotcomrendering.pageElements.TweetBlockElement","html":"The Bank’s decision to raise interest rates for a 14th meeting in a row – continuing the largest tightening cycle in more than 30 years – was expected. But this will provide little comfort for mortgagors facing an increase of around £3,000 in repayments next year.
\nWhile there is good news from the Bank of England that the real-pay squeeze will end sooner than expected, the price for taming inflationary pressures from Britain’s tight labour market is an increase in unemployment of around 350,000.
\nToday’s gloomy outlook from the Bank of England is particularly bad news for Rishi Sunak with the Bank’s forecasts suggesting that the likely backdrop to an election next year will be falling GDP, higher unemployment and big increases in mortgage repayments.
\n
","url":"https://twitter.com/resfoundation/status/1687089999764713472","id":"1687089999764713472","hasMedia":false,"role":"inline","isThirdPartyTracking":false,"source":"Twitter","elementId":"9dc97cb9-60b3-4b33-b01a-62a59e604653"}],"attributes":{"pinned":false,"keyEvent":true,"summary":false},"blockCreatedOn":1691073081000,"blockCreatedOnDisplay":"10.31 EDT","blockLastUpdated":1691079637000,"blockLastUpdatedDisplay":"12.20 EDT","blockFirstPublished":1691073282000,"blockFirstPublishedDisplay":"10.34 EDT","blockFirstPublishedDisplayNoTimezone":"10.34","title":"Bank forecasts are 'bad news for Rishi Sunak'","contributors":[],"primaryDateLine":"Thu 3 Aug 2023 12.26 EDT","secondaryDateLine":"First published on Thu 3 Aug 2023 02.26 EDT"},{"id":"64cbb3198f08e5e4127cde7f","elements":[{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"In line with expectations, the @bankofengland today raised interest rates to 5.25 per cent - the highest point since April 2008.
— Resolution Foundation (@resfoundation) August 3, 2023
Let's take a look at the outlook for inflation and the economy, and what it all means for households... 🧵https://t.co/4tMCJZRZkB pic.twitter.com/C9vvszx01C
The Trades Union Congress has accused the UK government of hiding behind the Bank of England, as the economy “runs into a wall”.
","elementId":"4d4f3c2d-b98c-4c1e-8a75-344993e4d59e"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Following today’s quarter-point increase in UK interest rates to 5.25%, TUC general secretary Paul Nowak said:
","elementId":"a78bb487-c3a5-43b2-adc2-ae032bebfb00"},{"_type":"model.dotcomrendering.pageElements.BlockquoteBlockElement","html":"\n","elementId":"056cf5d0-cef1-4cf4-b1df-80b13dac872d"}],"attributes":{"pinned":false,"keyEvent":true,"summary":false},"blockCreatedOn":1691071257000,"blockCreatedOnDisplay":"10.00 EDT","blockLastUpdated":1691074097000,"blockLastUpdatedDisplay":"10.48 EDT","blockFirstPublished":1691071392000,"blockFirstPublishedDisplay":"10.03 EDT","blockFirstPublishedDisplayNoTimezone":"10.03","title":"Conservative government is “flirting with a recession”, says TUC","contributors":[],"primaryDateLine":"Thu 3 Aug 2023 12.26 EDT","secondaryDateLine":"First published on Thu 3 Aug 2023 02.26 EDT"},{"id":"64cbb2338f08e5e4127cde73","elements":[{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"This Conservative government is flirting with a recession.
\nInstead of delivering a real plan to get us out of this living standards nightmare, ministers are hiding behind the Bank of England.
\nThis interest rate hike will only heap more misery on households and businesses – and put many thousands more jobs and livelihoods at risk.
\nIt’s the last thing working people need in the middle of a cost of living crisis.
\nThe government needs to deliver strong, shared growth, rather than an economy that is stagnating or shrinking.
\nMake no mistake. The chancellor is sitting on his hands while the economy runs into a wall and it will be working people who pay the price.
\nSetting us on course for another economic shock is reckless – not responsible.
\n
S&P Global Market Intelligence predict the Bank will raise interest rates again at its next meeting on 21 September, up to 5.5%.
","elementId":"6cf56ed5-d473-47f6-b90b-937a19c44527"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Recessionary pressures are accumulating with many UK households having to endure a steep climb in mortgage costs, they warn.
","elementId":"536fabc9-f92c-4094-bea0-bdad253862ed"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Raj Badiani, principal economist at S&P Global, says:
","elementId":"0f5652fc-f735-445c-bccb-e26fe51dbbfd"},{"_type":"model.dotcomrendering.pageElements.BlockquoteBlockElement","html":"\n","elementId":"8f6924dc-7261-4479-b194-33138cf93290"}],"attributes":{"pinned":false,"keyEvent":true,"summary":false},"blockCreatedOn":1691071027000,"blockCreatedOnDisplay":"09.57 EDT","blockLastUpdated":1691071172000,"blockLastUpdatedDisplay":"09.59 EDT","blockFirstPublished":1691071172000,"blockFirstPublishedDisplay":"09.59 EDT","blockFirstPublishedDisplayNoTimezone":"09.59","title":"'Shallow recession' looming, with monetary policy 'too restrictive'","contributors":[],"primaryDateLine":"Thu 3 Aug 2023 12.26 EDT","secondaryDateLine":"First published on Thu 3 Aug 2023 02.26 EDT"},{"id":"64cbaa688f08d95cff6bbbee","elements":[{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"We believe that monetary policy is now too restrictive, we expect interest rates to be higher for longer, with the first rate cut unlikely before mid-2024. Therefore, economy is likely to buckle further, with shallow recession anticipated around the start of next year.”
\n
If it isn’t hurting it isn’t working. That was the message from John Major, then chancellor, in 1989 during a previous period when interest rates were being used to combat high inflation.
","elementId":"5483d000-65d7-438c-8137-a32058e421e9"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"And it was the message rammed home by the Bank of England on Thursday, our economics editor Larry Elliott writes.
","elementId":"f2f39d89-015b-4ae3-82fe-701ccc781044"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Any hard-pressed households or struggling business looking for comfort from Threadneedle Street would have been disappointed by news that the pain will continue and is likely to intensify. Interest rates may not yet have peaked.
","elementId":"537ea554-2c0c-4693-8d0e-bcb8f42bcd13"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"In one sense, the latest decision by the Bank’s monetary policy committee (MPC) came as little surprise. As expected, it raised the official cost of borrowing for a 14th time in a row, and by 0.25 percentage points to 5.25% as anticipated by the City.
","elementId":"74ffe26c-a594-46f4-a1c7-7207ab5f5c5d"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"What will have raised a few eyebrows is the Bank’s language, which has noticeably toughened up. Previous increases in rates were already slowing the economy but the MPC said it would “ensure that Bank rate is sufficiently restrictive for sufficiently long to return inflation to the 2% sustainably in the medium term”.
","elementId":"f61e3009-ef43-40ea-8bcb-dc103a90adcc"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"More here:
","elementId":"12f76adb-299c-475e-994e-da5cc59f5669"},{"_type":"model.dotcomrendering.pageElements.RichLinkBlockElement","url":"https://www.theguardian.com/business/2023/aug/03/more-pain-in-store-tough-talking-bank-raises-uk-interest-rates-and-a-few-eyebrows","text":"More pain in store – tough-talking Bank raises UK interest rates and a few eyebrows","prefix":"Related: ","role":"thumbnail","elementId":"4f6f5326-0eaa-439b-8408-ac4523ccfd3c"}],"attributes":{"pinned":false,"keyEvent":true,"summary":false},"blockCreatedOn":1691069032000,"blockCreatedOnDisplay":"09.23 EDT","blockLastUpdated":1691069128000,"blockLastUpdatedDisplay":"09.25 EDT","blockFirstPublished":1691069129000,"blockFirstPublishedDisplay":"09.25 EDT","blockFirstPublishedDisplayNoTimezone":"09.25","title":"Larry Elliott: More pain in store from tough-talking Bank","contributors":[{"name":"Larry Elliott","imageUrl":"https://i.guim.co.uk/img/static/sys-images/Guardian/Pix/pictures/2014/4/17/1397749335083/LarryElliott.jpg?width=300&quality=85&auto=format&fit=max&s=58abc26c8992a5fe974de1d42f3b89dd","largeImageUrl":"https://i.guim.co.uk/img/uploads/2017/10/06/Larry-Elliott,-R.png?width=300&quality=85&auto=format&fit=max&s=e7b230406d755166fb74384c5236e7c2"}],"primaryDateLine":"Thu 3 Aug 2023 12.26 EDT","secondaryDateLine":"First published on Thu 3 Aug 2023 02.26 EDT"},{"id":"64cba8148f08e5e4127cde06","elements":[{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"The Bank of England is being criticised from both sides of the political spectrum over today’s interest rate rise.
","elementId":"fd599601-a9e9-4e00-9984-57601d46a580"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"The IPPR, the progressive thinktank, warns that the Bank is “tightening the screws too much” by lifting interest rates to a 15-year high of 5.25% today.
","elementId":"d9ddb55b-f483-41ed-8c63-5110b705a2a3"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Carsten Jung, senior economist at IPPR, suggests rates could be more than one percentage point too high.
","elementId":"9405023c-81d8-4632-be9c-7b3f08f08bb7"},{"_type":"model.dotcomrendering.pageElements.BlockquoteBlockElement","html":"\n","elementId":"bbef678f-da37-4dac-aeca-e934201400d0"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"The UK economy is weakening. The labour market is slowing down, and productivity is falling. Increasingly there is a realisation that the Bank of England is already overdoing it.
\nBy raising interest rates to 5.25 per cent, the Bank is tightening the screws too much and causing excessive harm for households and businesses. Interest rates might well be more than a percentage point too high now.
\nInstead of further rate rises, we need a more balanced approach to tackling inflation, using more government support. Countries like Spain have kept energy prices lower, temporarily limited rent increases and tackled excessively high profits through taxation. Their inflation rate has recently fallen back to target. The UK should take inspiration from their example.
\n
The pro-free market Institute of Economic Affairs, is also concerned that the Bank is overreacting.
","elementId":"42592e84-2bc3-42db-aa40-0548f7696ada"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Julian Jessop, economics fellow at the IEA, says:
","elementId":"6c1f5fee-6b6f-4ea8-a1fa-b3b2e2a40296"},{"_type":"model.dotcomrendering.pageElements.BlockquoteBlockElement","html":"\n","elementId":"f8fd1d4d-9663-4dc3-9e23-aed26b710ed9"}],"attributes":{"pinned":true,"keyEvent":true,"summary":false},"blockCreatedOn":1691068436000,"blockCreatedOnDisplay":"09.13 EDT","blockLastUpdated":1691074150000,"blockLastUpdatedDisplay":"10.49 EDT","blockFirstPublished":1691068932000,"blockFirstPublishedDisplay":"09.22 EDT","blockFirstPublishedDisplayNoTimezone":"09.22","title":"Bank of England criticised over interest rate rise","contributors":[],"primaryDateLine":"Thu 3 Aug 2023 12.26 EDT","secondaryDateLine":"First published on Thu 3 Aug 2023 02.26 EDT"},{"id":"64cba3988f082f4d589125db","elements":[{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"The Bank’s decision to raise rates again, albeit by just a quarter point, suggests that the MPC is still looking in the rear view mirror.
\nMoney and credit growth have already slowed sharply and other leading indicators of inflation have weakened, including commodity prices and evidence from business surveys.
\nIt would have made more sense to pause to assess the impact of the large increases in rates that have already taken place, as other central banks have done.
\nThe UK economy is like a frog slowly being cooked by ever higher interest rates. By raising the temperature further now, the Bank risks doing too much and, once again, only realising its mistake when it is too late.
\n
Q: Will keeping interest rates at ‘restrictive levels’ add to the downturn in the housing market?
","elementId":"d666b6b1-6042-4c4f-9f88-94a8cca5a410"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Andrew Bailey says there are signs of an ‘adjustment’ in the housing market.
","elementId":"273d9af2-bde1-4e9c-b071-42b9208fbc02"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"House prices have fallen [down 3.8% in the year to July], but we also saw a small increase in net lending and mortgage approvals earlier this week, he says.
","elementId":"24f7d8a3-d64c-4f83-a26e-afcd81d9bc69"},{"_type":"model.dotcomrendering.pageElements.RichLinkBlockElement","url":"https://www.theguardian.com/business/2023/jul/31/uk-mortgage-approvals-rise-despite-surge-in-borrowing-rates","text":"UK mortgage approvals rise despite surge in borrowing rates","prefix":"Related: ","role":"thumbnail","elementId":"e94c7096-8b2c-41c6-b276-9fe6a6dce92c"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Bailey insists:
","elementId":"b4e5a141-f948-4e60-9f59-04d7f3048cc7"},{"_type":"model.dotcomrendering.pageElements.BlockquoteBlockElement","html":"\n","elementId":"01e113df-44ae-4715-9392-5a8df8814536"}],"attributes":{"pinned":false,"keyEvent":true,"summary":false},"blockCreatedOn":1691067288000,"blockCreatedOnDisplay":"08.54 EDT","blockLastUpdated":1691068498000,"blockLastUpdatedDisplay":"09.14 EDT","blockFirstPublished":1691067499000,"blockFirstPublishedDisplay":"08.58 EDT","blockFirstPublishedDisplayNoTimezone":"08.58","title":"Bailey doesn't see crash in housing market","contributors":[],"primaryDateLine":"Thu 3 Aug 2023 12.26 EDT","secondaryDateLine":"First published on Thu 3 Aug 2023 02.26 EDT"},{"id":"64cba0838f08e5e4127cddcb","elements":[{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"I would certainly not wish to talk this up into a crisis in the housing market, because there is plenty of evidence that suggests this is a process that has some moderating influences in it as well.
\n
Q: How soon could the Bank cut interest rates?
","elementId":"1698d26d-14ca-4232-a75e-059749ae3da8"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Andrew Bailey declines to make a prediction.
","elementId":"76000c87-9ff1-4970-8ff4-54fe5f8d0ffc"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"He repeats that there are “a number of paths” which interest rate could take from here, but it’s “far too soon to speculate” on when rates could be cut.
","elementId":"9788fbcf-d752-4e3f-b908-8434832f781f"}],"attributes":{"pinned":false,"keyEvent":true,"summary":false},"blockCreatedOn":1691066499000,"blockCreatedOnDisplay":"08.41 EDT","blockLastUpdated":1691066586000,"blockLastUpdatedDisplay":"08.43 EDT","blockFirstPublished":1691066577000,"blockFirstPublishedDisplay":"08.42 EDT","blockFirstPublishedDisplayNoTimezone":"08.42","title":"Bailey won't say when rates could be cut","contributors":[],"primaryDateLine":"Thu 3 Aug 2023 12.26 EDT","secondaryDateLine":"First published on Thu 3 Aug 2023 02.26 EDT"},{"id":"64cb974c8f08e5e4127cdd36","elements":[{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Q: How can you say there is good news, when we have slower growth, higher unemployment, higher bank rate. Inflation looks more challenging, and the wage-price spiral appears to be crystallising.
","elementId":"06089744-161c-4710-a790-a4f3daf9cd2f"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"What’s gone wrong with the economy, and has the Bank lost control?
","elementId":"afcff19e-053c-46ac-904c-d9b8a69809ee"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Governor Andrew Bailey doesn’t agree with this assessment, and pushes back.
","elementId":"747b7baa-b2b1-4b09-a5ed-deaefea85a88"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"He says there is a “much more assured path downwards” for inflation, with falls expected in July and October’s data (because of the UK’s energy price cap which changes on a quarterly basis).
","elementId":"c66f322d-235c-49da-b24e-a1880b8f37f7"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Bailey reminds reporters that last November, the Bank was forecasting a long recession because energy prices were then so high.
","elementId":"f88268d3-ffb5-4e90-bfe5-38e6b7199c41"},{"_type":"model.dotcomrendering.pageElements.BlockquoteBlockElement","html":"\n","elementId":"ecfcb70f-ba38-412e-b355-2c2a7af3ee91"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"The economy has been much more resilient. That’s good news. We have to then set policy to work with it.
\n
And while unemployment has risen, it is still historically low.
","elementId":"1082c371-c870-462e-bf4d-c88692777485"}],"attributes":{"pinned":false,"keyEvent":true,"summary":false},"blockCreatedOn":1691064140000,"blockCreatedOnDisplay":"08.02 EDT","blockLastUpdated":1691064495000,"blockLastUpdatedDisplay":"08.08 EDT","blockFirstPublished":1691064495000,"blockFirstPublishedDisplay":"08.08 EDT","blockFirstPublishedDisplayNoTimezone":"08.08","title":"Bailey: Economy has been more resilient than expected","contributors":[],"primaryDateLine":"Thu 3 Aug 2023 12.26 EDT","secondaryDateLine":"First published on Thu 3 Aug 2023 02.26 EDT"},{"id":"64cb909e8f08e5e4127cdcb6","elements":[{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Governor Andrew Bailey shows today’s press conference a chart outlining how inflation is expected to keep falling.
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predicts that inflation will fall to around in July, to around 7% (we get this data in around two weeks).
","elementId":"f2ff1093-b44b-403e-a17d-8705b8866903"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"It will be followed by a larger drop in October’s inflation data, to around 5%, Bailey predicts.
","elementId":"5867cb26-c47e-4ed0-800e-b517644c7f2c"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"If he’s right, that means Rishi Sunak could hit his target of halving inflation in November (when we get October’s inflation data).
","elementId":"2df79706-ae4d-47c5-9c95-553dfd758f2c"}],"attributes":{"pinned":false,"keyEvent":true,"summary":false},"blockCreatedOn":1691062430000,"blockCreatedOnDisplay":"07.33 EDT","blockLastUpdated":1691069969000,"blockLastUpdatedDisplay":"09.39 EDT","blockFirstPublished":1691062646000,"blockFirstPublishedDisplay":"07.37 EDT","blockFirstPublishedDisplayNoTimezone":"07.37","title":"Bailey: Inflation expected to fall to 5% in October's data","contributors":[],"primaryDateLine":"Thu 3 Aug 2023 12.26 EDT","secondaryDateLine":"First published on Thu 3 Aug 2023 02.26 EDT"},{"id":"64cb8fe68f08d95cff6bba4e","elements":[{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Governor Andrew Bailey begins his press conference by saying the fall in UK inflation to 7.9% in June was ‘good news’.
","elementId":"967ba5b7-ae3a-44d6-ba59-d2504314f1a7"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Bailey predicts that inflation will continue to fall over the coming months, as tighter monetary policy is working to bring inflation down.
","elementId":"7b1a18f8-9f5c-4adc-afe6-dd6dc9785e20"},{"_type":"model.dotcomrendering.pageElements.BlockquoteBlockElement","html":"\n","elementId":"b0778ab9-17d6-4f23-9c86-92f66c81d3d3"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Our job is to make absolutely sure that inflation falls all the way back to the 2% target, and stays low.
\n
That is why the Bank has raised interest rates by a quarter of one percentage point, to 5.25%, he says.
","elementId":"12d226cf-74e4-42f6-8f45-1ba5b4665ebf"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Bailey points out that high inflation hurts the least well off the most.
","elementId":"d47fb44f-7f48-4ced-b434-ad399305a42c"}],"attributes":{"pinned":false,"keyEvent":true,"summary":false},"blockCreatedOn":1691062246000,"blockCreatedOnDisplay":"07.30 EDT","blockLastUpdated":1691062412000,"blockLastUpdatedDisplay":"07.33 EDT","blockFirstPublished":1691062412000,"blockFirstPublishedDisplay":"07.33 EDT","blockFirstPublishedDisplayNoTimezone":"07.33","title":"Bailey: High interest rates are working","contributors":[],"primaryDateLine":"Thu 3 Aug 2023 12.26 EDT","secondaryDateLine":"First published on Thu 3 Aug 2023 02.26 EDT"},{"id":"64cb8c028f082f4d5891247a","elements":[{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"The Bank of England has warned businesses and households that the cost of borrowing will remain high for at least the next two years as it raised interest rates for the 14th consecutive time to 5.25%, my colleague Phillip Inman reports from the Bank.
","elementId":"59c9fe35-2ae5-49db-a915-5461d5834af1"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Ruling out the likelihood of a recession over the next two years, policymakers blamed strong wages growth in recent months for the need to increase interest rates by 0.25 percentage points to the highest level for 15 years.
","elementId":"ed9b2025-af53-4d71-a211-3ea69a55ac2d"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"In a three-way split on the Bank’s nine-strong monetary policy committee (MPC), officials said the economy had proved more resilient during a period of high interest rates than they expected when they last made an assessment of the UK economy in May.
","elementId":"09a699f7-b961-4c34-b660-2447845aee20"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Energy prices were expected to fall over the rest of the year, bringing inflation down below 5% in the fourth quarter, allowing the government to declare a victory in its mission to halve inflation by the end of 2023 from a peak of 10.5% at the start of the year.
","elementId":"ab822216-2c71-4df9-8a8a-76e0b2ba534f"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"However, the Bank said strong demand for workers, which is pushing wages higher, and a rise in the cost of services that has only just reached a peak were proving a persistent barrier to bringing down inflation.
","elementId":"c8db8c06-ffdf-46da-8766-326413ec17da"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"More here:
","elementId":"efa546ec-b782-48c4-ad87-2620487a0ba2"},{"_type":"model.dotcomrendering.pageElements.RichLinkBlockElement","url":"https://www.theguardian.com/business/2023/aug/03/bank-of-england-raises-uk-interest-rate-to-fresh-15-year-high","text":"Bank of England raises UK interest rate to fresh 15-year high of 5.25%","prefix":"Related: ","role":"thumbnail","elementId":"b6571c55-0e38-4873-862a-5cbc0072a178"}],"attributes":{"pinned":false,"keyEvent":true,"summary":false},"blockCreatedOn":1691061250000,"blockCreatedOnDisplay":"07.14 EDT","blockLastUpdated":1691062095000,"blockLastUpdatedDisplay":"07.28 EDT","blockFirstPublished":1691062095000,"blockFirstPublishedDisplay":"07.28 EDT","blockFirstPublishedDisplayNoTimezone":"07.28","title":"Full story: Bank of England warns interest rates will remain high for at least two years","contributors":[{"name":"Phillip Inman","imageUrl":"https://i.guim.co.uk/img/static/sys-images/Guardian/Pix/contributor/2007/09/28/phillip_inman_140x140.jpg?width=300&quality=85&auto=format&fit=max&s=ff3dad18a53e7f4c53a0f9e4e844fabf"}],"primaryDateLine":"Thu 3 Aug 2023 12.26 EDT","secondaryDateLine":"First published on Thu 3 Aug 2023 02.26 EDT"},{"id":"64cb8c908f08d95cff6bba1a","elements":[{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Chancellor Jeremy Hunt has acknowledged that today’s increase in interest rates will hurt families.
","elementId":"ed7773b2-837d-4de6-8bf2-22b83f582aed"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Hunt says:
","elementId":"2e1e1df8-d19c-48ad-9deb-321c5d2d6692"},{"_type":"model.dotcomrendering.pageElements.BlockquoteBlockElement","html":"\n","elementId":"a5904bb0-27ae-44e8-83e0-7c07d2aa581a"}],"attributes":{"pinned":false,"keyEvent":true,"summary":false},"blockCreatedOn":1691061392000,"blockCreatedOnDisplay":"07.16 EDT","blockLastUpdated":1691061435000,"blockLastUpdatedDisplay":"07.17 EDT","blockFirstPublished":1691061435000,"blockFirstPublishedDisplay":"07.17 EDT","blockFirstPublishedDisplayNoTimezone":"07.17","title":"Hunt: It's not easy for families facing higher mortgage bills","contributors":[],"primaryDateLine":"Thu 3 Aug 2023 12.26 EDT","secondaryDateLine":"First published on Thu 3 Aug 2023 02.26 EDT"},{"id":"64cb8af08f08d95cff6bb9fa","elements":[{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"“If we stick to the plan, the bank forecasts inflation will be below 3% in a year’s time without the economy falling into a recession.
\n“But that doesn’t mean it’s easy for families facing higher mortgage bills so we will continue to do what we can to help households.”
\n
The Bank of England believes Rishi Sunak is on track to hit his target of halving inflation by the end of the year.
","elementId":"21ff968d-28a8-4179-bb35-f5e28da281c8"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"It predicts inflation will have dropped to around 5% by the end of this year, down from 10.5% in December 2022.
","elementId":"483d6fbf-5e4c-44d6-9bcf-841cf185a980"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"The minutes of the Bank’s meeting say:
","elementId":"1b0b5c4a-dab9-4766-9cfa-85904f615d92"},{"_type":"model.dotcomrendering.pageElements.BlockquoteBlockElement","html":"\n","elementId":"ec2615b2-f349-4819-80aa-d161cbb448d2"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"CPI inflation remains well above the 2% target. It is expected to fall significantly further, to around 5% by the end of the year, accounted for by lower energy, and to a lesser degree, food and core goods price inflation.
\nServices price inflation, however, is projected to remain elevated at close to its current rate in the near term.
\n
[Reminder: Falling inflation does not mean that prices are falling, simply that they are rising less quickly]
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","elementId":"c35f2323-b467-4865-961d-e5768e5f16b9"}],"attributes":{"pinned":false,"keyEvent":true,"summary":false},"blockCreatedOn":1691060557000,"blockCreatedOnDisplay":"07.02 EDT","blockLastUpdated":1691060743000,"blockLastUpdatedDisplay":"07.05 EDT","blockFirstPublished":1691060744000,"blockFirstPublishedDisplay":"07.05 EDT","blockFirstPublishedDisplayNoTimezone":"07.05","title":"BoE split three ways over rate rise","contributors":[],"primaryDateLine":"Thu 3 Aug 2023 12.26 EDT","secondaryDateLine":"First published on Thu 3 Aug 2023 02.26 EDT"},{"id":"64cb7bbf8f08d95cff6bb867","elements":[{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"Newsflash: The Bank of England has raised UK interest rates to a new 15-year high.
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","elementId":"23131dab-868b-45d4-ae4b-7ee41e4f10f1"},{"_type":"model.dotcomrendering.pageElements.TextBlockElement","html":"The rise, which will bring more pain to borrowers, comes despite signs that the UK economy recovery is slowing.
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