Shock as interest rates hiked to 5 per cent

Coffee House Shots

The Spectator

News, Daily News, Politics

4.4 • 2.2K Ratings

🗓️ 22 June 2023

⏱️ 12 minutes

🔗️ Recording | iTunes | RSS

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Summary

James Heale speaks to Isabel Hardman and Kate Andrews as the Bank of England announced it has hiked interest rates to 5 per cent. Faced with inflation, a looming mortgage crisis and personal debt, Rishi Sunak said today he is '100 per cent on it'. But can he turn things around?

Produced by Natasha Feroze.

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Transcript

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0:00.0	This episode is sponsored by Canacord Genuity Wealth Management.
0:03.6	Experience Wealth Managers who go above and beyond to guide and support you.
0:08.0	Kandu is more than just an attitude. It's navigating today for a brighter tomorrow.
0:13.2	Visit KanduWealth.com.
0:19.0	Hello and welcome to Coffee House Shots. I'm James Heel. I'm joined today by Kate Andrews and it's well-harmed.
0:24.0	And of course the big story today is the fact that the Bank of England has the 13th consecutive quarter
0:28.6	increased the rates of interest up to 5% now rising by 0.5% today.
0:33.6	Kate, tell us about the decision and the thinking behind it.
0:36.6	The Bank of England tends to follow the Federal Reserve when it comes to interest rate hikes.
0:41.6	It didn't really have that option this time around because the Federal Reserve decided to hold rates a few weeks ago.
0:47.6	One of the reasons it was able to do that is because it has been more aggressive in rate rises
0:52.6	and they put themselves in more flexible position where they have suggested that rates will go higher
0:57.6	but for now they could hold. The Bank of England was not in that position because having moved more slowly and more cautiously
1:04.6	the rate of inflation in the UK is more than double the rate of inflation in the States.
1:08.6	The UK is becoming a real outlier. Once the labour market statistics came out,
1:13.6	the bank is particularly concerned about wages, how quickly they're going up.
1:17.6	They think that's contributing to inflation. I'm not as convinced but once those stats came out last week,
1:22.6	it was quite clear there was going to be another rate rise and the market was estimating around 0.25% of points.
1:29.6	Once the inflation figures came out this week, the market said nope, it's got to be higher.
1:35.6	If the banks will retain any credibility because those inflation figures as we discussed on the podcast yesterday were dire.
1:42.6	Not only did the headline rate of inflation not budge but core inflation rose quite significantly up on the year in May to 7.1%.
1:51.6	Which suggests that if you exclude things like food and energy, certainly impacted by the war in Ukraine,
	...

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