Press Story

Responding to the latest MPC decision, William Ellis, senior economist at IPPR, said:

"The Bank of England rightly stopped sales of long-dated gilts today. This is welcome and overdue. But unlike the US and Europe, the Bank hasn’t completely stopped active sales, and the way the Bank of England operates in the gilt market still costs taxpayers billions each year. The government needs to explore options to plug this gap, bringing us in-line with international best practice, and giving more fiscal space.

On the decision to hold interest rates, William Ellis said:

“The Bank held rates today as expected, but there is pressure for higher rates later this year following increases in Europe and the US. Higher interest rates are the wrong tool for this shock. This is not British inflation, but the war in Iran arriving on British bills. No interest rate change can lower global energy prices.

"Families face the most expensive winter since 2022/23, with annual energy bills expected to be almost £500 higher in January than they are now. Higher interest rates won’t lower these prices, and families risk being hit twice – first on their energy bills, and then on their mortgages.

"Unlike the Bank, the government can act directly on energy prices. If the conflict does not de-escalate quickly, the government should announce a temporary ceiling on household energy bills. This limits inflation at source, reduces pressure for higher interest rates, and stops a temporary shock doing lasting damage to living standards."