Timing of interest rate rise odd, but it wont make much difference to inflation or household budgets

Jack Leslie, Senior Economist at the Resolution Foundation, said: “While the timing of the Bank’s decision to raise interest rates is odd given the economic damage currently being caused by Omicron, the fact is that it is unlikely to make much difference to either inflation or household budgets. The real action is with the Treasury – both in terms of needing to act to support businesses during Omicron, and in shaping the macroeconomic debates.

“With inflation being driven by global pressures, domestic rate rises won’t affect the underlying drivers of those pressures. And with fewer than one-in-ten home-owners on a variable rate mortgage, very few people will see a rise in their mortgage payments.

“Instead, today’s rate rise reflects the rude health of the jobs market, and the need to start normalising rates given the labour market recovery of the past year.”