Bank warns rate must rise
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.Interest rates will have to rise if the Government wants to hit its inflation target, the Bank of England told the Chancellor, Kenneth Clarke, yesterday - and the sooner the better.
The Bank's starkest warning yet about the need to raise the cost of borrowing as the economy forges ahead came as a blow to Tory hopes of the return of the "feelgood factor" with a further interest-rate cut ahead of the election.
Ministers hailed an ICM poll narrowing the gap between Labour and the Tories as evidence of political revival fuelled by economic recovery. But Labour said the poll, in the Guardian, showed Labour's support steady at 45 per cent - enough for a landslide victory.
Chief economist Mervyn King made the Bank's views plain: "The question will be when to raise interest rates." Although inflation is likely to fall from its current 2.8 per cent in the short term, he said it would be preferable to raise base rates sooner rather than later. "The longer we leave it, the further they will have to move."
The Bank's quarterly inflation report yesterday predicted that with no change in policy there is a worse-than-evens chance of inflation staying below its 2.5 per cent target in two years' time. It also warned that the Government was running too big a budget deficit. It said high borrowing requirements "cannot be reconciled with hitting the inflation target as well as maintaining a sustainable fiscal position".
Business reactions, page 15
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments