Economists have criticised Sir Keir Starmer after he said he is confident that interest rates will come down under a Labour government.
Sir Keir was asked by reporters if he believes that under a Labour government that interest rates will fall, he said that his government will “stabilise the economy.”
The Labour leader said, “That’s why we’ve set out our six steps which are the things that we will do on July 5, on the first day if we get the opportunity, and the first thing is to stabilise the economy, for the very reason I said.
“If you lose control of the economy it’s working people who pay the price and I’m not prepared to let that happen.”
During an interview with The Times Rishi Sunak made a similar claim at the start of the general election as he said the Tories will bring down interest rates.
However economists have criticised the Labour leader saying that interest rates are controlled by the Bank of England’s Monetary Policy Committee who are independent.
In defence the Prime Minister said that he was only agreeing the Bank’s governor Andrew Bailey as he had said his is “optimistic” that the base rate will fall.
Bailey said in May that in June a rate cut cannot be “ruled out,” but it is not a “fait accompli” the PA news agency reported.
However, the chance of their being an interest rate cut this summer has plummeted as wage have grown rapidly.
According to the Office for National Statistics (ONS) in the three months to April pay, including bonuses has increased by 5.9%, this is far higher than economists predicted, as they were expecting a rise of 5.7%.
Victoria Scholar, head of investment at Interactive Investor said, “The central bank is unlikely to deliver its first cut to interest rates in August, with November currently the likeliest month for the start of the upcoming monetary loosening cycle.
“The Bank of England might also want to wait until the 4th July general election is out of the way so that it can avoid any accusations of supporting the government or a lack of independence.”
Matthew Ryan, head of market strategy at global financial services firm Ebury, said, “Wage growth remained sticky and far too high for comfort in April at around 6%, well above the levels that would make the Bank of England have any real confidence in achieving its 2% inflation target, he commented.
“The rest of the data was, however, patently consistent with a cooling in labour market conditions. Unemployment is rising, albeit gradually, and is now at its highest level since September 2021.”
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