higher savings for some. in the last half an hour, we ve had this reaction to the rate rise from the chancellor, jeremy hunt. well, of course any rise in interest rates is a worry for families with mortgages, for businesses with loans. but underneath that decision is a forecast that says that this time next year, inflation will be 2.8% and we will have avoided recession. what the bank of england governor is saying is that we have a plan that is bringing down inflation lay solidly, robustly and consistently. so the plan is working but what we have to do as a government is make sure we stick to that plan and don t veer around like a shopping trolley. we stick to that plan so that families and businesses can start to feel the benefits of that plan actually working. so, jeremy hunt says the government is sticking to its plan. but this was the reaction from labour s shadow chancellor, rachel reeves. the government need to take responsibility for the fact that inflation in the uk
the economy too much. to dicsuss this further i m nowjoined by the bank of england 5 former head of international surveillance, katharine neiss. she is now the chief european economist for pgim fixed income. good to have no surprise that interest rates are still rising. do you think that this is it? ~ , . ., ., is it? the banker very clear today that if inflation is it? the banker very clear today that if inflation remains - is it? the banker very clear today that if inflation remains resilientl that if inflation remains resilient at higher levels, then they could see interest rates are going higher from here. that said, to me, the really big message coming out of the bank of england today was, even in the absence of further rises in interest rates, they really see these higher interest rates that we have seen more recently as he had to say for quite some time. yes. have seen more recently as he had to say for quite some time. say for quite some time. yes, and this is tami
responsibility for the fact that inflation in the uk is much higher than it is in comparable countries. in the us, it is 3%. in the eurozone it is 5.3%. and yet, here in britain, inflation remains stubbornly at 7.9% because of a decade or more of mismanagement by the conservative party. let s talk to our work and money reporter peter ruddick. what does this mean for people with mortgages? it what does this mean for people with mortua . es? . , what does this mean for people with mortua . es? ., , , what does this mean for people with mortauaes? , , . mortgages? it was widely expected but unfortunately mortgages? it was widely expected but unfortunately that mortgages? it was widely expected but unfortunately that will - mortgages? it was widely expected but unfortunately that will not - but unfortunately that will not prevent the pain from hurting. let s break this down, for people on a variable or a tracker rate mortgage, which tracks the bank of england base rate, they
not in line. what the bank is doing is looking back at inflation, but forward at what this rate decision may influence in terms of behaviour. i think, from last bank of england became, where they moved a 50 basis points, that was taken as a really big jump in rates. since that decision, we have seen some improvement in inflation numbers. there were still some calming for a 50 basis point change, but i think that this was more of the consensus. as you say, the balance between trying to get inflation under control, because let s not forget, that also makes people poorer in the long run, and also, making sure that there is not too much damage done to there is not too much damage done to the economy is a balancing act that they have to play. and, if you watch some of the comments andrew bailey made after the meeting, there were some pretty negative outlook in terms of gdp and the general gross scenario for the uk. scenario for the uk. and, a fine line in terms scenario for the