London: UK Chancellor of the Exchequer Jeremy Hunt says he’s in favor of higher interest rates to tackle inflation, even if it causes a recession.
When asked if he’s comfortable with the Bank of England potentially triggering a recession in its fight against stubbornly high inflation, Hunt told Sky News “Yes, because in the end the inflation is a source of instability.”
“If we want to have prosperity, grow the economy, reduce the risk of recession, we have to support the Bank of England in the difficult decisions they take,” Hunt said in the Sky interview broadcast Friday. “It’s not a trade-off between tackling inflation and recession, in the end the only path to sustainable growth is to bring down inflation.”
While the Consumer Prices Index fell back into single digits - at 8.7 per cent - it remained much stronger than expected. Services and core prices increased at the fastest rate in more than three decades, fueling bets on further rate hikes.
Hunt told Sky that “there’s nothing automatic about bringing down inflation” and though it’s a “big task,” it will be delivered.
Prime Minister Rishi Sunak promised in January to cut inflation by half. Though inflation is coming down, the cost-of-living crisis remains persistent, with grocery prices jumping 19 per cent and mobile phone bills climbing 7.9 per cent.