CBI responds to latest Bank of England interest rate decision

Anna Leach, Deputy Chief Economist, said:

“The Bank of England had no choice but to go for a bumper rate rise given that inflation had surprised on the upside for the fourth occasion. The sharper increase will come as a blow to hard-pressed households and businesses who are struggling with rising costs. With further rises likely from the Monetary Policy Committee this summer, the squeeze on firms and households is set to intensify as they grapple with the highest borrowing costs in 15 years. 

“In the months ahead, the MPC will be looking for evidence that inflation rates in services and wages in particular are slowing materially before calling an end to rate rises. Meanwhile, the extent of fixed rate mortgages in this tightening cycle increases the risk that rates overshoot. It is a delicate balancing act trying to ensure high inflation doesn’t become embedded in the economy while limiting economic damage.”