Why Bank of England upped rate
Q I’m a borrower impacted by this rate hike. I’m already struggling to make ends meet and this will make things even worse. What do you say to people like me?
A I know raising rates isn’t easy for people when money is already tight. But it’s the best way we have to make sure that prices don’t keep rising at the rates they have been – which would be much worse.
Q Just when will this current wave of rate hikes end? Do you think the Bank could even begin to start cutting rates later this year or next?
A It’s too soon to say. It’s our job to get inflation back down to the 2% target and for it to stay there. We’ll make whatever decisions are needed to ensure that happens.
Q Do you accept that hiking the base rate from 0.1% in late 2021 to where it is now has added to the cost of living crisis?
A The biggest cause of the cost of living crisis has been the rise in energy and food prices due to the war in Ukraine. We know how difficult this has been for people, which is why our focus is bringing inflation back down to 2%. Raising interest rates is the best way to do that.
Q Have you got a mortgage, Governor? If so, have your repayments risen as a result of the rate hikes?
A I’ve lived in my home for 27 years, so I’m fortunate enough to no longer have a mortgage. I’m very aware of the impact of interest rate rises on mortgage holders across the country. But I also know that high inflation hits everyone, and hits people on the lowest incomes hardest.
Q Does the Bank think inflation has peaked?
A Yes, we expect to see it fall sharply starting this month. This is good news but we do need to be sure it falls all the way back to 2% and that’s why we’ve decided to raise interest rates.
Q Rocketing food inflation is one of the biggest concerns for many households now. Does the Bank/MPC think it will keep rising?
A Higher food price inflation is a worry for us all. As part of my job I meet food producers and retailers around the country. They expect food inflation to come down over this year.
Q Do you share MPs’ concerns that banks are failing to pass on rising interest rates to savers while at the same time increasing mortgage rates sharply?
A Some savings rates have gone up, and some more than others. There are lots of options out there, I would encourage people to shop around for the best rates.
Q Does the collapse of several US banks suggest global banking is again showing signs of strain? Is this the biggest challenge for the financial system since the 2008 banking crisis or is it a storm in a teacup?
A We’ve seen strains in some banking systems abroad but I can assure you that our UK banks are safe and sound.