Prime Minister Rishi Sunak said he fully supports the Bank of England, days after a larger-than-expected rate increase by the central bank sent new shockwaves through the UK economy.
(Bloomberg) — Prime Minister Rishi Sunak said he fully supports the Bank of England, days after a larger-than-expected rate increase by the central bank sent new shockwaves through the UK economy.
The BOE’s track record “is that inflation has been managed appropriately,” Sunak said in an interview with the BBC. “Inflation is the enemy that we need to conquer.”
UK inflation remains stubbornly high, even as price pressures abate in the US and parts of Europe, and traders are starting to bet that the BOE’s terminal rate could reach 6.25% by December, the highest in 25 years.
Read more: Traders Bet BOE Will Raise Rate to Highest Since 1998 This Year
Some senior members of Sunak’s government have been openly critical in recent weeks of the BOE’s inflation-fighting efforts, saying Governor Andrew Bailey was slow in recognizing that posts-pandemic inflation pressure would endure. In the interview, Sunak gave a full-throated endorsement.
“The Bank of England is doing the right thing,” he said. “The Bank of England has my support. Inflation is the enemy.”
As part of an effort to make good on Sunak’s pledge to drag inflation rates down by half, the government is considering blocking pay rises for millions of public workers amid concern they could push prices higher, the Times reported last week.
“I get that this is challenging and that will have an impact on me in the short term, but we have to stay the course,” Sunak told the BBC. “There isn’t an alternative to stamping out inflation.”
Read more: Sunak Risks Failing on His Five Key UK Pledges at Halfway Point
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