Interest rate reaction: Government must act before the worst-case scenario arrives, says IPPR

Responding to the latest MPC decision, Carsten Jung, associate director at IPPR, said:

“With oil prices currently their highest since the Iran war began, the energy crisis is far from over. While the Bank held rates constant, they have clearly stated that the situation could get worse before it gets better. If energy markets do not improve very quickly, they will likely raise rates and keep them higher for longer - hitting growth and hurting households.

“The government is not powerless in this. Temporarily capping energy costs can limit inflation increases and can be cheaper than being hit by big second round effects and having to clean up a recession later.

“As these shocks become more frequent in a more volatile world, reducing our reliance on fossil fuels is the smart move to protect the economy moving forward.”