Rishi Sunak's pledge to ease the cost of living crisis is in tatters after the Bank of England was yesterday forced to raise interest rates to 5% in an attempt to tackle stubbornly high inflation.
With the prime minister under fire over the soaring cost of borrowing, the central bank pushed through a half-point increase, deploying what economists described as "shock and awe" tactics. Mortgage holders are bracing themselves for more pain, with rates now at their highest level since the 2008 financial crisis, and markets betting on a further rise to 6% by Christmas.
The prime minister said he supported the Bank's move, despite warnings that the economy may have to be pushed into recession in order to tame the steepest price rises in the G7.
Speaking on a visit to an Ikea distribution centre in Kent after the Bank's decision, Sunak sought to reassure workers by arguing he was "totally, 100% on it" in his central mission to ease the pressure on living costs. "It is going to be OK and we are going to get through this and that is the most important thing I wanted to let you know today," he said.
He repeated a promise to halve the rate of inflation by the end of the year, but said it had "clearly got harder" to meet the pledge and admitted the chances of doing so were diminishing.
Joe Nellis, a professor of global economy at Cranfield School of Management, said: "The Bank of England is deploying shock and awe tactics in a bid to shake the economy out of its current state of inflation. Inflation is becoming embedded in the system with little sign of it subsiding.
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