Inflation: Mortgage misery for 5m UK households as Bank of England warns of ‘big interest rate hike ‘

*Andrew Bailey, Governor of the Bank of England, discloses in Washington, that officials will ‘not hesitate’ to raise interest rates to tackle inflation and ensure financial stability in the United Kingdom

Isola Moses | ConsumerConnect

As Britain’s economic upheaval continues to make headlines worldwide, the Bank of England has stated it will widen its purchases of United Kingdom (UK) Government bonds to prevent ‘a material risk to UK financial stability’.

It was learnt the latest move is in third emergency intervention since sacked Chancellor Kwasi Kwarteng announced the mini budget.

British Prime Minister Liz Truss

The proposed  measure reportedly comes as Andrew Bailey stated the he spoke with new Chancellor Jeremy Hunt and had an ‘immediate meeting of minds’.

Interest rates could be raised higher than initially expected to tackle inflation, it has been warned, Metro UK report said.

It is recalled that Pound, once more, fluctuated against the latest mini-budget chaos 8n the country.

Mr. Andrew Bailey, Governor of the Bank of England,  said in Washington, in the United States (US), that officials would ‘not hesitate’ to raise interest rates if necessary to tackle inflation.

Bailey noted that a ‘stronger’ response than previously anticipated could be required 8n the country’s economy.

It comes as new figures revealed that over five million households could see their annual mortgage payments rise by an average of £5,100 over the next two years.

Bailey’s recent comments have taken on increased significance, following the Government’s mini-budget that spooked the markets, sent the Pound plummeting, and forced the independent Bank of England to intervene in a bid to restore financial stability in the UK, according to report.

On ex-Chancellor Kwasi Kwarteng’s tax-cutting budget

The political and economic chaos unleashed by then Chancellor Kwasi Kwarteng’s tax-cutting budget eventually culminated in his sacking by Prime Minister Liz Truss Friday, October 14, 2022.

Truss continues in her bid to restore her Government’s fiscal credibility, report stated.

Bailey further acknowledged what he called the ‘violent moves” in the UK markets as he signalled that interest rate could be in line to increase again.

The Governor of the Bank of England has confirmed that he spoke to the freshly installed Chancellor of the Exchequer about Britain’s economic state of play.

Bailey had a ‘meeting of minds’ with Jeremy Hunt on the issue of fiscal sustainability, report said.

Taking questions in Washington, he further said: “I can tell you that I spoke to Jeremy Hunt, the new Chancellor, yesterday.

“Absolute chaos after cash machine starts giving out free money

“I can tell you that there was a very clear and immediate meeting of minds between us about the importance of fiscal sustainability and the importance of taking measures to do that.”

Bailey said: “It’s not appropriate for me to constrain the choices he makes but the very clear message I would give and it is a clear message for everybody, including a clear message for markets.

“I can tell you there is a very clear and immediate meeting of minds on the importance of stability and sustainability.”

As winter approaches, and further fears on inflation and the cost of living crisis rise, further calls have been made for Government intervention.

Former Health and Foreign Secretary, Jeremy Hunt, is made Chancellor of the Exchequer by PM Liz Truss after she sacked Kwasi Kwarteng from the role.

The revealed that more than five million households could see their annual mortgage payments rise by an average of £5,100 over the next two years, according to a leading think tank.

In total, mortgage payments are set to rise by £26 billion a year by the end of 2024, the Resolution Foundation has warned.

Affected households in London will see the biggest increase, with average payments projected to rise by £8,000 over this period – more than twice the level of the £3,400 increase experienced by households who are impacted in Wales.