Chancellor urges Bank of England to cut base interest rate
Rachel Reeves says the Bank should consider cutting its base rate as inflationary pressures subside and the economy continues to improve.
Labour Chancellor Rachel Reeves says she would support a cut in the base interest rate when the Monetary Policy Committee members meet on 1st August.
She said homeowners with mortgages would welcome the Bank of England reducing its base rate, as it would provide “relief” for many suffering in the cost of living crisis.
Reeves, who became Chancellor after Labour’s victory in the General Election earlier this month, said the Bank was “rightly independent”, but should consider a rate cut.
I know that many people who have been struggling with higher mortgage rates…would welcome some relief with lower costs.”
“Of course, I know that many people who have been struggling with higher mortgage rates after the Conservatives’ mini-budget just under two years ago, would welcome some relief with lower mortgage costs,” she said.
She made her comments to The Times after it was revealed by the Office for National Statistics (ONS) that the economy expanded by 0.4% in May.
Payments rise steeply
Many people with mortgages have seen their monthly payments rise steeply after coming off a fixed rate over the last year.
And around three million more will see their mortgage payments rise over the next two years by an average £180 per month.
Vote against
Two members of the Bank’s Monetary Policy Committee (MPC), which sets interest rates, said last week that they would probably not vote for a lower rate on 1 August.
And Huw Pill, chief economist, warned that underlying inflation was still too high for a rate cut. The last meeting of the MPC in June decided to keep the base rate at a 16-year high of 5.25%.