Hunt will back more interest rate rises even if it pushes UK to recession

Jeremy Hunt said helium volition backmost further involvement complaint rises by the Bank of England, adjacent if it risks plunging the UK into recession, successful bid to combat soaring inflation.

The chancellor’s comments travel aft figures this week showed yearly ostentation successful April was higher than expected astatine 8.7%, raising the imaginable of a 13th involvement complaint emergence by the Bank of England. Markets are present predicting that involvement rates could ascent to 5.5% by the extremity of the year, up from their existent level of 4.5%, putting further unit connected borrowers and the lodging market.

When asked whether helium was comfy with the cardinal slope doing immoderate was needed to bring down inflation, adjacent if that could origin a recession, Jeremy Hunt told Sky News: “Yes, due to the fact that successful the end, ostentation is simply a root of instability. And if we privation to person prosperity, to turn the economy, to trim the hazard of recession, we person to enactment the Bank of England successful the hard decisions that they take.”

The chancellor said that portion it was not an casual decision, it sent the close connection to planetary markets. “I person to bash thing else, which is to marque definite the decisions that I instrumentality arsenic chancellor, precise hard decisions, to equilibrium the books truthful that the markets, the satellite tin spot that Britain is simply a state that pays its mode – each these things mean that monetary argumentation astatine the Bank of England [and] fiscal argumentation by the chancellor are aligned,” helium said.

Earlier this week the International Monetary Fund said it no longer expected the UK to autumn into recession this year, aft observing the greater “resilience” of households and businesses during the worst of the ostentation shock. It besides predicted that ostentation would autumn backmost to 5% by the extremity of the twelvemonth and beneath the Bank of England’s 2% people by the summertime of 2024, chiefly successful effect to falling vigor prices.

Hunt said ostentation would not driblet without determination and coordination by the Bank of England and Treasury.

“When the premier curate announced that it was his nonsubjective to halve ostentation successful January, determination were immoderate radical who derided that; they said: ‘Well, it’s automatic; ostentation is going to travel down anyhow.’ There’s thing automatic astir bringing down inflation; it is simply a large task but we indispensable present it, and we will. It is not a trade-off betwixt tackling ostentation and recession. In the end, the lone way to sustainable maturation is to bring down inflation,” helium said.