Chancellor Jeremy Hunt has taken a stance that he would back further interest rate hikes by the Bank of England in order to combat soaring inflation despite the risk of plunging the UK into recession.
The comments have come to light after the figures this week showed a higher annual inflation in April as compared to the expected 8.7% This figure has led to a rise in the prospect of a 13th interest rate rise by the Bank of England. Interest rates could climb up from their current level of 4.5% to 5.5% by the end of the year, putting further pressure on borrowers and the housing market.
On being asked whether he was comfortable with the central bank doing whatever was needed to bring down inflation, despite the risk of recession, he responded affirmatively. According to Hunt, inflation will continue to soar without determination and coordination by the Bank of England and Treasury.
BoE can't rule out rate hike
According to Jonathan Haskel, a member of its decision-making body, the BoE cannot rule out more interest rate hikes. Haskel told an audience in Washington DC that in case the inflation worsens, the bank might have no other option but to increase interest rates again to achieve its 2% target. A day after Consumer Prices Index inflation was revealed to have hit 8.7% in April, Haskel said, “as difficult as our current circumstances are, embedded inflation would be worse. The fact of the matter is that inflation in Britain is too high ... these numbers are just too large”, he further added.