Inflation could put homeowners MORE mortgage pain after Bank of England base interest rate hike

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Millions of homeowners face MORE mortgage pain in new year: Bank of England chief economist warns ‘many more rate hikes’ could occur if inflation persists

  • Huw Pill was asked today if there would be “a lot more rate hikes to come”
  • When asked if it could happen if inflation stayed the same, he replied, “Well I think it’s true”
  • The BoE voted 8-1 Thursday to increase its main interest rate to 0.25% from 0.1%










Bank of England chief economist Huw Pill said the central bank would have to raise interest rates further if inflation persists, a day after the BoE raised borrowing costs for the first time since the start of the pandemic.

When asked on CNBC TV if there would be “a lot more rate hikes to come,” if inflation stayed at its current level, Pill replied on Friday: “Well, I think that’s it. is right”.

“Yesterday the Bank responded to the view that … core inflation, generated more nationally here in the UK, likely centered on cost and wage pressures in a tight and tight labor market , will prove to be more persistent over time, “he said. added.

His comments will send another shiver down the spines of mortgage holders who appear likely to face more charges.

The BoE voted 8-1 Thursday to raise its main interest rate to 0.25% from 0.1%, making it the first major central bank to do so since the start of the pandemic. Financial markets expect further increases to 0.5% by March and 1% by September.

The central bank revised its inflation forecast upward to predict that consumer price inflation will peak in 30 years of around 6% in April, when regulated household energy bills are expected to rise. The CPI hit a 10-year high of 5.1% in November, more than double the BoE’s 2% target.

Asked on CNBC TV if there would be “a lot more rate hikes to come” if inflation stayed at its current level, Huw Pill (pictured) replied on Friday: “Well I think it is true”

Pill, echoing the BoE’s latest policy statement, said it was not clear whether the rapidly spreading Omicron variant of the coronavirus would increase or ease inflationary pressures.

“We must now proceed with caution, in the sense that we must assess whether Omicron is going to lead to a reversal in the strength of the dynamics of the economy – and in particular of the labor market – that we have seen in the last more than 20 years. six months.

“But I think it’s also important to keep in mind that the uncertainty related to Omicron is bilateral, at least as reflected in our primary focus, our ambition in terms of the inflation outlook to the medium. term, “he added.

The central bank revised its inflation forecast upward to predict that consumer price inflation will peak in 30 years of around 6% in April, when regulated household energy bills are expected to rise.  The CPI hit a 10-year high of 5.1% in November, more than double the BoE's 2% target

The central bank revised its inflation forecast upward to predict that consumer price inflation will peak in 30 years of around 6% in April, when regulated household energy bills are expected to rise. The CPI hit a 10-year high of 5.1% in November, more than double the BoE’s 2% target

The pandemic had shown that closures and social distancing did not always reduce consumer demand, and instead shifted it to durable goods where there were often supply chain difficulties, pushing up prices, said Pill.

Higher interest rates would not offset the short-term effect of soaring energy prices, which have been amplified by tensions between Russia and Ukraine pushing up natural gas prices.

“This is something that is very uncomfortable for us because it keeps inflation above target, well above target and unacceptably above target for longer,” Pill said.

The pandemic had shown that lockdowns and social distancing did not always reduce consumer demand, and instead shifted it to durable goods where there were often supply chain difficulties, driving up prices, said Pill

The pandemic had shown that lockdowns and social distancing did not always reduce consumer demand, and instead shifted it to durable goods where there were often supply chain difficulties, driving up prices, said Pill

But the central bank would seek to limit the pressures generated at the national level by a tight labor market.

“These are things that are likely to require a monetary policy response here in the UK to ensure that they are contained,” he said.

The BoE cut its unemployment forecast for the last quarter of this year to 4% from 4.5% on Thursday, and estimated underlying private sector wages were rising at an annual rate of 4.5% from 3% before the pandemic.

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