Fears grow interest rate rises could trigger recession
The chief economist of the Bank of England (BoE) says interest rates will be increased further due to fears inflation could disrupt the British economy further.
Huw Pill has warned of increased measures to tackle the rising inflation, despite having already raised interest rates by 0.75% to 3% last week, the largest rise since Black Wednesday in 1989. He stated that the Bank’s monetary policy committee (MPC) could push the rates higher in December as he stated:
“I think there is more to do. We’ve done some, that’s what we did last week. And there’s still more to do.”
This could place a profound impact on mortgage borrowers with higher repayments costs. Pill spoke at a conference in London hosted by the investment bank UBS, where he stated:
“The tightness in the labour market remains very persistent here in the UK, and that is despite the fact that we already have a slowing economy, and maybe an economy that is in recession at the turn of the year.”
In anticipation of the chancellor, Jeremy Hunt’s, budget statement next week there are increased fears the UK could be plunged into a recession, however Pill claims the BoE “cannot declare victory” against inflation rises despite the risks of a recession.
Pill added the main aim was reduce inflation down to 2%, with inflation rising to a record peak of 10.1% in September. Pill concluded that:
“The weakening of the economy is to some extent a necessary part of the disinflationary path we need to see.”
