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Jeremy Hunt has told Sky News he is comfortable with Britain being plunged into recession if that’s what it takes to bring down inflation.
The chancellor said that he would fully support the Bank of England raising interest rates higher, potentially towards 5.5%, as it battled higher-than-expected prices.
Asked by Sky News whether he was “comfortable with the Bank of England doing whatever it takes to bring down inflation, even if that potentially would precipitate a recession”, he said: “Yes, because in the end, inflation is a source of instability.
“And if we want to have prosperity, to grow the economy, to reduce the risk of recession, we have to support the Bank of England in the difficult decisions that they take.
“I have to do something else, which is to make sure the decisions that I take as chancellor, very difficult decisions, to balance the books so that the markets, the world can see that Britain is a country that pays its way – all these things mean that monetary policy at the Bank of England (and) fiscal policy by the chancellor are aligned.”
The comments came after market expectations for the eventual peak of UK interest rates leapt dramatically, following higher-than-expected CPI inflation data this week.
While the anticipated peak for UK rates was a little above 4.75% last week, it lurched higher, to 5.5%, following Wednesday’s statistics. Save for the gyrations after the mini-budget last autumn, it was the biggest shift in interest rate expectations since 2008.
Prime Minister Rishi Sunak pledged in January that he would halve inflation this year, which in practice means…
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