After months of not commenting on the Bank of England’s forecasts and decisions, the dam has finally broken. Chancellor Jeremy Hunt has acknowledged that there were flaws in the bank’s economic forecasting after their actions failed to help curb sky-rocketing inflation. Find out more about his comments on the future of the UK economy by reading this short-read article.
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Following on from criticism from economists and Tory MP’s the Hunt piled onto that by saying its modelling needed to improve. He seemed to be in agreement with the head of the Bank of England, who has been open about the fact that the bank’s forecasting hasn’t been accurate. Andrew Bailey, the Governor of the Bank of England has also admitted that it was taking longer than expected for inflation to come down.
The Chancellor cited the independent review the BoE is conducting as more evidence that they know things haven’t exactly been working and they need to be doing better. He softened the critique by saying the move shows their determination to get it right and turned it back around to other banks for taking too long to pass on higher interest rates to savers. The problem was raised during Chancellor Hunt’s recent meeting with bank chiefs as a priority and he is actively working on a solution.
Currently, inflation sits at 8.7% and is not likely to return to the 2% target until 2025. As a result, the Bank of England just raised the interest rate to 5%. The base rate has not been this high since 2008 and will no doubt increase costs for millions of homeowners in due time. A concerning fact as mortgage rates have already doubled this year.
If you’re a homeowner who is facing the end of their initial mortgage term and are concerned about remortgaging with higher rates, get in touch with your trusted adviser. We can help you navigate the process and find the best deal for your circumstances, so don’t hesitate to contact us today.