Rishi Sunak tries to calm panic over interest rates as they hit highest level for 15 years

RISHI Sunak tried to calm panic over interest rates yesterday as they hit their highest level for 15 years.

He promised homeowners who are facing huge rises in their bills: “I am 100 per cent on it.”

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And the Prime Minister went on: “It is going to be OK and we are going to get through this.”

The Bank of England’s aggressive rate increase of 0.5 per cent, to five per cent, was the 13th in a row.

It was a desperate move to try to curb inflation which remains stubbornly high at 8.7 per cent.

But it is a blow to 800,000 borrowers whose fixed rate deals end this year, while another 1.6million face a shock next year.

Markets had been expecting Bank chiefs to raise the rate by just 0.25 per cent.

At the beginning of the year, Mr Sunak had pledged to halve inflation.

He told The Times CEO Summit the target was not out of reach.

But he warned: “Clearly, it’s got harder. Anyone who tells you this is easy is not being straight with you.

Mr Sunak also hit back at demands from Tory MPs for more tax cuts, which he said would only “fuel the fire” of inflation.

The PM said: “I’d love to cut your taxes tomorrow but I can’t say yes to more government borrowing.”

And Mr Sunak said he would not give in to sky-high public sector pay demands.

Meanwhile, BoE governor Andrew Bailey denied wanting to trigger a recession but he hinted rates could go higher to try get inflation down to its two per cent target.

He said: “We’re not expecting, or desiring a recession. But we will do what is necessary to bring inflation down to target.”

Bank bosses from HSBC and Santander will be among those hauled into Downing Street today for talks on help for bills.

But the government and Labour have ruled out public bailouts.

This post first appeared on thesun.co.uk