Interest rates could be cut later this year in 'massive relief for families with mortgages,' says Jeremy Hunt
Interest rates
Interest rates could be cut later this year in a “massive relief for families with mortgages,” Jeremy Hunt said on Friday.
The Chancellor made the prediction as official figures showed the economy surging out of recession.
Asked on LBC Radio is he could foresee the Bank of England’s Monetary Policy Committee cutting interest rates this year, he said: “Yes…the Bank of England…”
Pressed by presenter Nick Ferrari whether it could be this summer, he added: “I would not like to predict an exact time but the Bank of England governor says he is optimistic that we are on the right track.
“It would be a massive relief for families with mortgages if they can bring them down.
“So I hope that turns out to be the case.”
The Bank of England held rates at 5.25 per cent on Thursday, amid speculation that the first cut could come this summer.
Its governor Andrew Bailey highlighted “encouraging news” on inflation, at 3.2 per cent March, but said the MPC needed “more evidence” it would stay low before cutting rates.
A strongly-rebounding economy could make a decision on a rates cut more challenging.
But Tory MPs are hoping for several rate cuts ahead of the general election, expected in the autumn.
The UK’s economy jumped out of recession with faster-than-expected growth over the first three months of 2024, according to official figures.
The Office for National Statistics said gross domestic product (GDP) is estimated to have risen by 0.6 per cent in the first quarter of the year.
It comes after a shallow recession at the end last year, with two quarters of decline.
The GDP jump was better than the 0.4 per cent expected by the City.
Seizing on the figures, Rishi Sunak tweeted: “The economy has turned a corner. Today’s news proves that.
“We know things are still tough for many people, but the plan is working, and we must stick to it.”
The economic data is a rare bit of good news for the Prime Minister and comes just a week after the Tories lost nearly 500 councillors in the May 2 local elections, as well as the West Midlands mayoralty, the Blackpool South by-election, and suffered the heavy defeat of Susan Hall by Sadiq Khan in London.
Centrist Tory MPs welcomed the economic figures which give some respite to Mr Sunak who had faced the threat of an attempted coup by Rightwingers who then pulled back from their plans once they realised that they lacked support in the broader Conservative party.
If Mr Sunak can get deportation flights to Rwanda taking off within weeks, his allies will feel he has a platform on which to fight the next general election.
But the Tories are still around 20 points, if not more, behind Labour in the polls, and it is not clear how many voters are ready to change their mind on their desire for a change of Government.
Labour’s shadow chancellor Rachel Reeves said: “This is no time for Conservative ministers to be doing a victory lap and telling the British people that they have never had it so good.
“The economy is still £300 smaller per person than when Rishi Sunak became Prime Minister.”
Liberal Democrat Treasury spokeswoman Sarah Olney added: “This Conservative Government crashed the economy and sent mortgages spiralling.
“If Rishi Sunak thinks hard-hit households will be celebrating today, he is even more out of touch than we thought.”
To receive the best stories in your inbox every day, click here to register for one or more newsletters from The Standard.