Bank of England governor Andrew Bailey has been increasingly hawkish on interest rate rises in recent days, saying “inflationary pressures will require a stronger response” and he “will not hesitate to raise interest rates”.
The bank’s monetary policy committee (MPC) will meet on 3 November to set the Bank of England base rate (the rate of interest charged by the bank to commercial banks). Expectations are that there could be a sharp rise from the current 2.25%, to which it was increased in late September.
Interest rate rises are damaging on a number of levels. For government investment, it means borrowing at higher rates – bad news when the nation’s debts (currently £2.36tn, or 99.6% of GDP) are rising. It also means spending a growing share on debt interest.
