The Bank of England (BoE) has been warned against “overdoing it” after their latest interest rate hike, with a Tory MP warning that taking interest rates further could have a detrimental impact on the country’s economy. The BoE this morning increased interest rates by 0.5 percent to 3.5 percent. Tory MP Sir John Redwood welcomed the decision, adding they “should have done it some time ago.”
But he warned: “They should now not overdo it because they’re putting the economy through a very abrupt tightening”.
Speaking to Express.co.uk, he added: “What they should not do is threaten the long-term rate of interest because inflation is now coming down.”
Long-term interest rates refer to government bonds maturing in ten years and are generally averages of daily rates, measured as a percentage.
They are one of the key determinants of business investment, with low rates encouraging investment in new equipment and high interest rates discouraging it.
Responding to the BoE’s decision, Chancellor Jeremy Hunt said: “High inflation, exacerbated by Putin’s war in Ukraine, continues to plague countries across the world, eating into people’s pay checks and driving up food and energy prices.
“I know this is tough for people right now, but it is vital that we stick to our plan, working in lockstep with the Bank of England as they take action to return inflation to target.
“The sooner we grip inflation the better. Any action which risks permanently embedding high prices into our economy will only prolong the pain for everyone, stunting any prospect of economic recovery.”
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