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A SHOCK decision to double interest rates is “the last thing hard-pressed families need”, the TUC said yesterday.
The Bank of England’s monetary policy committee caused consternation when it announced the first rise in the base rate of interest in 10 years.
The rise from 0.25 per cent to 0.5 per cent reverses the bank’s emergency cut following the vote to leave the EU last year.
The change is likely to add around £15 a month to the cost of the average mortgage.
Bank governor Mark Carney said: "With unemployment at a 42-year low, inflation running above target and growth just above its new, lower speed limit, the time has come to ease our foot off the accelerator."
But TUC general secretary Frances O’Grady warned: “With living standards falling, the economy needs boosting not reining in.
“Today's hike is a hammer blow for those in problem debt, whose repayments will now rise. The Bank of England has made the wrong call – but the government must not hide behind it.
“Working people are paying the price for ministers' failure to get wages rising. And for their failure to invest in jobs and services when interest rates were so low.”
The Bank of England also cut its forecast for growth to 1.6 per cent for 2017, from the 1.7 per cent it had previously predicted. But it held forecasts at 1.6 per cent for 2018 and 1.7 per cent for 2019.
Shadow chancellor John McDonnell said the decision to raise interest rates “reflects the deep pessimism of many economists about the underlying state of the British economy” after seven years of Conservative rule.
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