Rishi Sunak vowed to “keep throwing everything at” lower inflation. Photo: Simon Dawson/10 Downing Street
Rishi Sunak blamed the large number of fixed rate mortgage lenders for failing to bring down inflation.
The PM told MPs that the dominance of homeowners in Multi-year deals mean that the impact of higher interest rates has taken longer to feed and curb people's spending.
That, in turn, meant it took longer than expected to bring inflation down, he said in comments that critics called “tin ears.”
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In January, Mr. Sunak announced his five promises, including one to halve inflation to around five percent, but inflation remains consistently high at 8.7 percent.
Last week, the Bank of England raised interest rates to a 15-year high of five percent. It emerged on Tuesday that a typical five-year fixed mortgage deal has a rate of more than six percent.
Speaking before the House of Commons Liaison Committee, Mr Sunak acknowledged that inflation “has turned out to be more resilient” than expected as he stated that he was “working 100 percent” to bring it down.
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Responding to a question from Harriett Baldwin, chair of the Treasury Department's Select Committee, a Conservative spokesperson, said: “There are many different mechanisms for conveying how monetary policy affects the real economy. One of them is the mortgage rate, but there are other ways “.
“You are right that the transfer mechanism may be slower when it comes to mortgages than it has been in the past due to the prevalence of people who now have at least short-term fixed rate mortgages. But this is something that the Bank can take into account when modeling.
“Of course, I understand the hardship that higher interest rates create for mortgage holders.”
When asked how likely he would be to achieve his goal of halving inflation this year, the prime minister promised “ continue to do our best” to bring inflation down.
He said: “Leave it to the forecasters, but we remain committed to lowering inflation, and half way is a step to bring it down to the inflation target, which, obviously even lower than that.”
Mr. Sunak added that high inflation rates “have proved to be more sustainable than expected, but this does not mean that the plans and policy options that have been rolled out are wrong, in fact they are right.”
2506 Share mortgage loans by product type
When asked again to evaluate his chances of fulfilling his promise in percentage terms, Sunak refused to do so and said: “I don’t have this for you. I am working 100 percent to deliver it and we will continue to do so. That's all I can do is just keep throwing everything at it.”
Sarah Olney, spokesperson for the Liberal Democrat Treasury Department, said: “Homeowners on the brink are facing more mortgage distress, while Rishi Sunak's comments are getting more and more tinny day by day.
“It shows that this conservative government is just completely out of touch with reality. Conservative ministers have spiraled mortgages through all their chaos and incompetence. Now they won't lift a finger to help.”
Sir John Redwood, a former Conservative cabinet minister, said the prime minister was on the wrong track, adding that high taxes had a bigger impact on inflation than mortgages. fixed-rate loans.
“I think we have more problems with supply than with demand,” he said. “High taxes cause high inflation, which is why we need lower taxes and stimulus so we can grow as a country.”
He also promised to cut the public debt, which had reached over 100% of economic output for the first time since 1961 as government borrowing increased.
Growing the economy was another priority, but the economy has stabilized and the Bank of England is still raising interest rates. bets risking the odds. recession.
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When Mr Sunak vowed to cut NHS waiting lists, 7.2 million people in England were waiting for routine hospital treatment. April estimates were 7.4 million.
When asked if his promise to stop small crossings was put on hold while Rwanda's policy was based on litigation, Mr Sunak replied: “No and it's a good example why it's not delayed, it's our deal with Albania.”
Prime Minister denied he doesn't have a plan B unless the Supreme Court reverses the decision blocking the forced removal of asylum seekers to Kigali .
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He told the community relations committee that ministers would challenge the appeals court's decision “with confidence and vigor.”
Mr. Sunak also said there was no such thing as as a “drop” of Whitehall that prevents ministers from achieving their political goals.
The Prime Minister made the comments after William Wragg, Conservative Chairman of the Committee on Public Administration and Constitutional Affairs, told him that he had heard “disturbing reports of a blob wandering through Whitehall and interfering with the ambitions of ministers.”
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