RE: Good read12 Jun 2023 08:36
Introduction: Mortgage fears and London Tech Week
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
UK borrowers face further interest rate hikes this year as the fight against inflation continues.
A Bank of England policymaker is warning this morning that the UK central bank may need to make “further increases” to borrowing costs as it tries to ease the cost of living crisis.
Jonathan Haskel, a member of the Bank’s Monetary Policy Committee, suggests that more than one increase in interest rates may be needed.
Writing in The Scotsman today, Haskel says the BoE mustn’t allow inflation to become ‘embedded’ in the economy, saying:
We are monitoring indicators of inflation momentum and persistence closely.
My own view is that it’s important we continue to lean against the risks of inflation momentum, and therefore that further increases in interest rates cannot be ruled out.
As difficult as our current circumstances are, embedded inflation would be worse.
Expectations of higher interest rates has caused turbulence in the mortgage market in recent weeks.
Ian Stuart, CEO of HSBC UK Bank, told Radio 4’s Today programme that inflation is looking sticky, and probably won’t fall “quite as fast” as hoped.
That means that borrowing costs are unlikely to start falling again soon.