Daily Mirror

Bank says no pain, no gain

Rate rise essential to curb inflation

- BY SEAN FARRELL

THE BANK of England’s deputy governor has admitted the first interest rate rise for a decade will mean pain for borrowers.

Ben Broadbent, who voted to increase rates, said the Bank needed to squeeze borrowers to keep inflation under control.

Amid confusion about the Bank’s intentions, he also signalled that more rate rises were on the way.

He told the BBC: “There will be some [pain] and it’s one part of how monetary policy works. We anticipate we’ll need maybe a couple more rate rises to get inflation back on track, while at the same time supporting the economy.”

He said the pain for borrowers would be bearable because the rise was small, borrowing costs were at record lows. The Bank’s Monetary Policy Committee voted 7-2 on Thursday to raise interest rates to 0.5% from 0.25% – the first increase since July 2007. Governor Mark Carney said the move was needed to bring down inflation, currently at 3%.

But the City was confused by the Bank’s move, with some analysts questionin­g whether it was serious about further rate rises.

Broadbent’s comments were seen as an attempt to show the Bank had not gone soft and was prepared to do what was needed to get inflation back to the 2% target.

Martin Beck, of Oxford Economics, said: “The MPC’s rate hike fails the credibilit­y test.” He added there was little in the Bank’s statement to suggest a rise was needed. Most economists thought the increase was unnecessar­y with the economy cooling and uncertaint­y building over whether Britain will agree a deal to leave the EU.

 ?? TOUGH TALK Broadbent ??
TOUGH TALK Broadbent

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