Following the announcement of a surprise increase in the interest rate to 5% and inflation remaining at 8.7%, UK Prime Minister Rishi Sunak has pledged to reduce both the Bank of England’s base rate and price growth. Sunak, who previously served as Chancellor of the Exchequer, has sought to demonstrate his financial expertise and attention to detail as reasons why the public can trust him to deliver on his promises. He made a primary pledge at the start of 2023 to halve inflation from just over 10% to around 5% by the end of the year.
Speaking from a warehouse in Dartford, Kent, Sunak reassured the public that he is “totally, 100%, on it and it’s going to be OK and we are going to get through this.” He acknowledged that his approach to the economy, which includes keeping public pay low, avoiding tax cuts, and promising to halve inflation, may hurt his chances of re-election. However, he remained stoic and said that meeting his target has become harder, but not impossible. Sunak stated that the public can judge him on his progress in six months, nine months, or a year.
Earlier in the day, Sunak addressed the Times CEO summit and acknowledged that halving inflation by the end of the year is “hard, but not impossible.” He added that recent events have made it more challenging, but he remains committed to the goal. Sunak emphasized that he is “throwing absolutely everything at it.”
Opposition leader Sir Keir Starmer criticized the government’s response to the economic turmoil and warned against undermining independent institutions. He also expressed concern about the prospect of mortgage holders and families paying the price of the government’s failure. Starmer cited Labour’s new five-point plan for mortgages, released the previous night.
The Bank of England, which sets interest rates independently of the government, has a target to bring inflation down to 2%. The Prime Minister’s spokesperson reiterated the government’s support for the Bank and its efforts to reduce inflation. The spokesperson did not respond to questions about whether Bank of England Chief Andrew Bailey was doing a good job in tackling inflation.
Rishi Sunak, the UK Prime Minister, has pledged to halve inflation despite a surprise interest rate hike and continued high inflation. Sunak acknowledged the difficulty of his target but remained committed to it. Opposition leader Sir Keir Starmer criticized the government’s response to the economic turmoil, and the Bank of England has reiterated its commitment to reducing inflation. The situation remains uncertain, but Sunak’s pledge demonstrates his determination to address the problem.