RISHI Sunak has given the Bank of England his “total support” after it raised interest rates to a 15-year high, telling homeowners and borrowers to “hold their nerve”.
The Prime Minister said there was “no alternative” to the fight to bring down inflation, which flatlined at 8.7% in the year to May.
The Bank raised the base rate from 4.5 to 5% last Thursday, pushing up monthly bills for millions with variable rate mortgages and those coming off fixed rate deals.
It was the 13th increase in a row since December 2021, as the Bank tries to return inflation towards its 2% target by cooling demand in the economy.
One of Mr Sunak’s five pledges as PM is to halve inflation to around 5% by the end of 2023.
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Some of his MPs have accused the Bank of mishandling the inflation crisis, with former Treasury minister Andrea Leadsom saying it had done “too little too late”.
However in an often tetchy interview on BBC One’s Sunday with Laura Keunssberg, Mr Sunak gave the Bank his full public support.
He said: “The Bank of England is doing the right thing.
“The Bank of England has my total support. Inflation is the enemy for all the reasons that we have talked about. Inflation is what makes people poorer.”
Asked if there is another way besides raising interest rates, the Prime Minister said: “There is no alternative to stamping out inflation.
“I get that this is challenging, but we’ve got to stick to the course.
“I want people to be reassured that we’ve got to hold our nerve, stick to the plan and we will get through this.”
Pressed on whether he understood the financial pain that families were facing, the privately educated multi-millionaire replied: “I've never said that it's not challenging.
“I've never said that this isn't going to be a difficult time to get through.
“But what I want to give people the reassurance and confidence is that we've got a plan, the plan will work and we will get through this."
The comedian and author Ben Elton, who was appearing on the show, called Mr Sunak a “mendacious, narcissistic sociopath” after the interview.
Earlier, the Chief Secretary to the Treasury said there wasn’t “a single quick lever” the Government could pull to tackle inflation.
John Glen told Sky News: “There isn’t one single thing I can do sat in Whitehall that’s going to resolve this in one month.”
Asked about accusations that the Bank of England acted too slowly to curb inflation, he said: “We remain in the Treasury completely aligned to the Bank. We support (Bank Governor Andrew Bailey) in taking the decisions necessary.”
In the wake of the interest rate rise, banks and building societies have withdrawn hundreds of existing mortgage deals and jacked up the price of new ones.
The average two-year fixed home mortgage is now more than 6%, double that of a year ago.
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After a meeting with Chancellor Jeremy Hunt last week, lenders agreed to voluntary changes allowing borrowers to switch to interest-only payments for six months without it affecting their credit scores, although their future ability to borrow would be affected.
Labour MP Lisa Nandy said the agreements should be mandatory and be sector-wide, otherwise up to 2milllion people might not be able to benefit.
She also said that banks must pass on higher interest payments to savers.
UK Liberal Democrat leader Sir Ed Davey called Mr Sunak's comments "patronising".
He said: "Struggling homeowners will be rightly furious after watching an out-of-touch Prime Minister who has no idea of the pain caused by rising mortgage rates.
“Rishi Sunak’s patronising advice to struggling families coping with the cost-of-living crisis shows why he is not up to the job.
“People need help, not a Prime Minister instructing them to hold their nerve.”
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