Jonathan Haskel, a representative of the Bank of England, has highlighted the need to protect the central bank from persistent inflationary risks, which could lead to further increases in interest rates. In an article for The Scotsman newspaper, Haskel emphasized the possibility of raising the interest rate on loans by the Bank of England, as prices continue to rise, surpassing the target rate of 2%.
In his comments, Haskel echoed the views of investors and economists that the Bank of England is likely to raise borrowing costs in the near future, and possibly throughout the summer. The Monetary Policy Committee, consisting of nine members, has already raised the rate from near-zero levels at the end of 2021 to 4.5%, and markets anticipate a peak of around 5.5% by the end of this year.
The increase in interest rates does not directly impact the prices of goods, but rather ensures that inflation does not become entrenched in the economy and that prices do not continue to rise at the high rates seen recently.
It is expected that the rise in key lending rates will lead to further increases in mortgage and business loan costs. Haskel acknowledged that this could be challenging for some individuals, and it is important to consider this aspect when making policy decisions.
