Bank chief under fire for bungle as interest rates set to rise for 13th time – live

Bank of England chief Andrew Bailey is under fire from chancellor Jeremy Hunt’s economic advisers for failing to curb inflation, as interest rates are poised to rise for the 13th time in a row.

Today the Bank’s Monetary Policy Committee (MPC) is set to push interest rates up to their highest level for 15 years, piling further pressure on struggling mortgage holders.

Top economists accused Mr Bailey – who claimed there would be a sharp fall in inflation three months ago – of worsening the mortgage crisis by previously being too slow to act on persistent price rises.

Karen Ward, a member of Mr Hunt’s economic advisory council, said the Bank would now have to trigger a recession to finally tame the inflation problem. “There’s no other way around it.”

Floundering foreign secretary James Cleverly was left red faced in a bruising BBC interview when he was put on the spot over the inflation crisis.

Challenged six times to say how Rishi Sunak planned to cut price rises, Mr Cleverly stumbled in his replies – and was at one poiint greeted with laughter by BBC Radio 4 interviewer Amol Rajan.

Eventually Mr Rajan ended the interview abruptly, silencing Mr Cleverly and saying: “We’re going to the weather.”

At one a point tongue-tied Mr Cleverly mistakenly talked about “low-skilled inflation” harming the economy, when he meant to say “low-skilled immigration”.

The graph shows how much the rise of the UK inflation rate for food from 1989 to May 2023.

Food and non-alcoholic beverage prices rose by 18.4% in the year to May 2023, down from 19.1% in April and from 19.2% in March, which was the highest annual rate seen for over 45 years.

Have you been affected by rising interest rates? Are you seeing your mortgage payments soar? Get in touch by emailing maryam.zakir-hussain@independent.co.uk

Former Chancellor Lord Philip Hammond has told Andrew Marr that the government should consider relaxing immigration rules to avoid sending the country into recession: “I don’t think The Bank [of England] has got much choice [but to tip the country into recession] unless the government does something pretty significant intervening in the labour market in a different way.”

He added: “I think the government has regarded any relaxation of migration rules as being politically toxic. But rising mortgage rates on the scale we’re seeing is also politically toxic. I think we might have to have a debate about the balance between the two of you…”

When questioned about her plans to help people with their mortgages, Rachel Reeves, shadow chancellor said it was about helping those who are worried about coming forward for financial help.

She told BBC Radio 4: “It’s not urging, it’s an instruction. An instruction that was made during the Covid pandemic via the regulator to say to banks they have to offer these products to people who are in financial difficulties.

“So, interest-only mortgages, extending the term of the mortgages, halting repossession orders for six months and crucially saying to customers, if you seek support, your credit rating is not affected because there are many people who are really worried at the moment about coming forward and identifying themselves as someone who is struggling with their mortgage because they worry that will have knock-on effects on their credit ratings.

“I’m really concerned about these people who have saved up a deposit, have been making their monthly mortgage payments, who go out to work every day, are being clobbered by energy bills, food prices and now, on top of all of that, on average when you’re remortgaging you’re looking at nearly £3,000 extra a year and I want to support those people to get through this difficult period.”

Foreign secretary James Cleverly struggled to explain what Rishi Sunak and the government were doing to tackle inflation in an interview on BBC Radio 4.

Asked repeatedly for specific actions the government was taking, he told the Today programme: “One of the main vehicles for short-term addressing inflation is interest rates.”

Mr Cleverly was pushed on what the PM was doing, given interest rates are in the hands of the independent Bank of England.

“Not all the levers of control are in the government’s hands,” he said.The cabinet minister mentioned changes to training and apprenticeships as a way the government was trying to boost the economy.

Pushed again on short-term measures, he said: “One of the reasons why we have been thoughtful but cautious on public-sector pay awards is we know that is one of those things that adds inflationary pressures.

“We’re very conscious that increased government borrowing is one of those things that loops around and increases inflationary pressures.”

The Bank of England has no choice but to trigger a recession as a way of taming inflation, top economists have warned – including one of chancellor Jeremy Hunt’s own advisers.

The central bank is set to interest rates for the 13th time in a row today after shock inflation figures showed previous hikes failed to cut persistent price rises.

Some of Mr Hunt’s advisers have attacked the Bank for being too cautious in raising the base rate – saying it was time to accept the inevitability of a recession.

Foreign Secretary James Cleverly has rubbished suggestions that the UK should intentionally aim to enter a recession to dampen persistently high inflation.

Speaking to Sky News, he said the Government remained committed to cutting inflation but that triggering a recession was not the answer.

Mr Cleverly said: “What we need to do is we need to grow the economy.

“High interest rates don’t help with that. This idea that we should consciously be going into recession I don’t think is one that anyone in government would be comfortable subscribing to at all.”

He told the broadcaster: “We know that the Bank of England is independent in its decision-making with regard to interest rates. Obviously, it has an inflation target, which it needs to pursue.

“Of course, we are seeing inflation in significant part because of the upward pressure on food and fuel prices which are being amplified by this war in Ukraine.

“So, the Bank of England is independent and will make their decisions accordingly, but the Prime Minister has made it one of the Government’s priorities and all of us across government are working towards this.”

As core inflation hits a 30-year-high, a painful 0.5 per cent rise in interest rates is now on the cards, says James Moore:

If inflation is an economic illness, the cure of high interest rates isn’t working as it should.

Falling energy bills, and the first optimistic noises on food from supermarkets including Tesco, suggested there ought to be a fall, however small, in the Consumer Prices Index. Economists polled by Reuters predicted it would come in at 8.4 per cent for May.

In the end, the official number – unchanged, at 8.7 per cent – provided another crushing disappointment.

Here’s where it gets really nasty: core inflation – which strips out volatile components the Bank of England can’t do much to influence, such as food and energy – delivered a zinger right between the eyes.