The Bank of England governor Andrew Bailey has warned UK households there was still a “long way to go” before the cost-of-living crunch is brought under control.
After lifting interest rates to 4% on Thursday, the highest level since 2008, Bailey warned that the UK had not won its battle against inflation.
Bailey reiterated this point yesterday, in a video clip warning that inflation is “still much too high”. CPI did drop in December, but at 10.5% it’s five times higher than the Bank’s target.
This latest rise in interest rates – the 10th in a row – will drive up borrowing costs, adding to the strain on struggling household and businesses.
But Bailey insisted it’s the right decision: “We need to be absolutely sure we get inflation down. That’s why we’re raised rates.”