Households must prepare for interest rates to rise earlier than expected as the Bank of England attempts to keep a lid on inflation, a key policymaker has warned.
Michael Saunders, who sits on the Bank’s interest rate-setting Monetary Policy Committee (MPC), even hinted that rates could be hiked as early as this year.
On the rise: Michael Saunders, who sits on the Bank’s Monetary Policy Committee, hinted that rates could be hiked as early as this year
Households are experiencing a jump in the cost of living, amid an energy crisis, labour shortages and supply chain chaos. The confluence of problems is lifting the price of goods and energy bills are rocketing.
Markets are starting to price in a December rate hike and in an interview with the Sunday Telegraph Saunders suggested this might not be far off the mark.
A rate hike would push up costs for millions of households with variable mortgages, and put the squeeze on businesses which had piled on debt to make ends meet during the pandemic.
It would also ramp up the interest bill on the UK’s towering £2trillion national debt pile. The nine-strong committee will reconvene in November and December.
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