Furious Redwood lashes out at Bank of England over interest rate rise

A senior Conservative MP has hit out at the Bank of England after it raised interest rates for the 12th time in a row. Sir John Redwood blamed the Bank for stubbornly high inflation gripping the UK. Seven members of the Bank’s Monetary Policy Committee (MPC) voted to increase the base interest rate from 4.25 percent to 4.5 percent.

Ahead of the hike, the former Cabinet minister suggested the Bank was to blame for soaring inflation for “printing too much money” in 2021.

The Wokingham MP said: “The Bank of England today should not punish us more for its big mistake of printing too much money in 2021 giving us high inflation.

“It should announce an end to selling bonds at a big loss in the markets, landing taxpayers with a huge and needless bill.”

Following the midday announcement, Sir John questioned why the Bank “can’t they get it right”.

He said: “The Bank of England’s inflation and growth forecasts keep changing by big margins.

“How can they decide what interest rate to set to get [their target of] two percent inflation if they have no good idea what inflation will be?

“No apology from Bank of England for creating a credit and asset bubble in 2021 which led to a bad general inflation.

“No comment on the huge losses they now want to make by needlessly selling bonds. Why can’t they get it right?”

The Bank said food prices have stayed higher than expected, partly due to Russia’s war in Ukraine and poor harvests in some European countries, ramping up the cost of living for households across the UK.

It means Consumer Prices Index (CPI) inflation is expected to decline less rapidly than the Bank predicted in its last report in February.

Inflation is still expected to drop sharply from April this year, as energy prices decline and household bills are subsidised, the MPC said.

It added: “There remain considerable uncertainties around the pace at which CPI inflation will return sustainably to the 2 percent target.”

Inflation is expected to decline to 5.1 percent in the fourth quarter of the year, meaning the Government would narrowly hit its target to halve inflation by the end of the year.

The Bank had previously thought CPI inflation could fall as low as 1 percent by the middle of 2024 but it is now predicted to reach around 3.4 percent.

Meanwhile, economists at the Bank released a record upgrade to their economic growth expectations.

They now expect that gross domestic product (GDP) will not fall during a single quarter this year, meaning the economy is not set to decline and the UK could avoid a recession.

In February, the committee believed the economy could fall into a shallow recession starting from the first three months of the year.

Now it expects GDP to rise by 0.25 percent this year before a 0.75 percent increase next year and the year after.

It had previously forecast a 0.5 percent fall this year, followed by a drop of 0.25 percent next year and a 0.25 percent rise in 2025.

The interest rate hike means further pain for some households across the country, but borrowers tied to fixed-rate mortgages that have not renewed yet will not have been impacted.

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