INTEREST rates are expected to be hiked by 0.25% to 4.75% today, but with yesterday’s inflation rate remaining at 8.7% in the year to May, the same as it was the previous month, some suggest they could now rise by 0.5% to 5%.
Ahead of the Bank of England pronouncement on interest rates later this morning, threatening thousands more households with homelessness, one of Chancellor Hunt’s policy advisers let slip yesterday that it is now Tory government policy to ‘create a recession’.
Hunt delivered a grim message to besieged mortgageholders, speaking out in favour of high interest rates.
Hunt said: ‘If you look at what is happening in other countries, you can see that rises in interest rates do bring down inflation over time. That will happen here. But we do need to be patient. We need to stick to the course and we’ll get to the other side.’
Hunt backed further interest rate rises, saying the Tory government will not ‘hesitate in our resolve to support the Bank of England as it seeks to squeeze inflation out of our economy.’
Karen Ward, a member of Hunt’s economic advisory council and chief market strategist at JP Morgan Asset Management, said the bank needs to ‘create a recession’ to curb soaring prices, claiming that it has ‘been too hesitant’ in its interest rate rises so far.
She urged the bank to ‘create uncertainty and frailty’ in the economy to stop prices rising so fast.
‘It’s only when companies feel nervous about the future that they will think “Well, maybe I won’t put through that price rise”, or workers, when they’re a little bit less confident about their job, think “Oh, I won’t push my boss for that higher pay”,’ she told the BBC’s Today programme.
Food prices are 18% above what they were a year ago – the groceries that would have cost £60 now add up to over £70, they’ve risen over twice as fast as the general cost of living.
In May 2022, a kilogram of granulated white sugar cost 73p – it is now £1.10; a cucumber which would have cost 57p now costs 84p, baked beans that cost 76p for a can now cost £1.07.
Commenting on yesterday’s inflation figures, Unite general secretary Sharon Graham said: ‘These figures give little comfort to what is happening in the real world of workers and their families.
‘Month on month, they continue to feel the pain of their wages trailing behind escalating prices. Just look at the rising cost of groceries up more than 16% on last year.
‘Unite remains focused on fighting for workers and their pay. Already winning £350 million back in the pockets of our members.’
TUC General Secretary Paul Nowak said: ‘After more than a decade of pay stagnation, working people are still getting poorer every month.
‘Wage rises aren’t causing inflation, real pay is still lagging far behind where it needs to be even to get living standards back to where they were over a decade ago
‘Pushing interest rates so high that the economy is driven into recession will only make the current crisis worse.
‘What working people need is a credible plan for sustainable growth, to get living standards and public finances back on track.’
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