Jacob Rees-Mogg erupts at Bank of England over interest rates
EXCLUSIVE: Sir Jacob Rees-Mogg has blasted the Bank of England for refusing to lower interest rates despite inflation being down to target.
The Bank of England has been blasted this afternoon, after they voted against lowering interest rates despite inflation falling to 2% this week.
In a major blow to families struggling with their mortgage rates, the central bank’s Monetary Policy Committee voted 7-2 today in favour of its seventh consecutive freeze.
Governor Andrew Bailey insisted: “It’s good news that inflation has returned to our two percent target. We need to be sure that inflation will stay low and that’s why we’ve decided to hold rates at 5.25 percent for now.”
However he is now facing criticism from those who have long blasted the Bank of England’s approach to tackling inflation.
Sir Jacob Rees-Mogg has now told the Express that the Bank of England is failing in its duty to the British people if they are using the election as an excuse to leave interest rates unchanged.
The senior Tory warned: “Inaction is just as political as action. If the economic circumstances justify a cut the Bank fails to do its job by leaving rates unchanged.”
He was joined by the Institute for Public Policy Research (IPPR), who accused the Bank of having “tightened the screws too much for too long”.
Dr George Dibb, associate director for economic policy at IPPR, said the Bank is now “holding back the UK’s economic recovery”.
He said: “It should have followed the European Central Bank by starting to cut rates today.
“The Bank has to balance lingering price rises, notably in services, with the UK’s zero economic growth and a cooling labour market. With inflation expectations back down to pre-pandemic levels, it’s time for the Bank to switch gears, support the economy more, and cut rates.”
Prominent economist Julian Jessop said that while he disagreed the decision not to lower rates had been a political one, it should still be criticised on economic grounds.
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Mr Jessop said: “There is already plenty of evidence that underlying price pressures are easing”.
“The longer the Bank waits, the greater the risks that inflation undershoots the target, while unnecessarily holding back the recovery too.
“However, an August rate cut is still very much in play. The statement noted that a new set of forecasts will allow a fuller assessment of the risks that inflation persists.
“Even some of the members who voted for no change acknowledged that their decision was finely balanced…
“Of course, that would be too late for the Tories. But I genuinely do not believe this was a factor in the decision - especially as the election result is not exactly balanced on a knife-edge!”
With Sir Keir Starmer now set to enjoy an interest rates cut during his first month in power, it once again raises significant questions about Rishi Sunak’s judgement in calling a July election.
