The UK Prime Minister said this Sunday that the government has a “plan that will work” to bring inflation down from 8.7% in the UK by backing the Bank of England in raising interest rates to 5%.
In an interview with the BBC, Rishi Sunak was asked about the latest moves by the Bank of England’s Monetary Policy Committee, which on Thursday announced it was raising interest rates by half a percentage point to its highest level since 2008.
“I believe that the records of the Bank of England, including the records of the Governor [Andrew Bailey]over a long period of time is supported by adequate inflation management, and people should be confident that inflation will fall to the target level. [de 2%]”, he pointed out.
The British Prime Minister confirmed that the bank has his “full support” and stressed that “there is no alternative to reducing inflation”, which is at “historically high levels”, according to the National Statistics Office (ONS, acronym in English).
The chairman of the board acknowledged that the decision to raise interest rates was difficult and “unpopular”, although he said that “this is the right thing for the country in the long run.”
“I never said it wouldn’t be difficult, but I want to reassure people that we have a plan, that the plan will work and that we will get through this,” Sunak said, reiterating that “interest rates are a consequence of high inflation.” .
In this sense, the leader of the Conservative Party also noted that “we must clearly understand that what harms citizens, creates problems in their daily lives and their budgets, is inflation.”
Given recent economic data, analysts had forecast rates to hit 6% in early 2024 – the highest level in two decades – which in turn raised concerns about the impact of rising mortgage costs in the country.
The British Institute for Financial Studies (IFS), an influential UK think tank, has warned that rising interest rates could cause an estimated 1.4 million Britons with mortgages to lose 20% of their disposable income.