325 | How high could interest rates go? Plus Premium Bond hike, loyalty point value & State Pension top ups
Cash Chats UK Money & Personal Finance podcast
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The Effect of Interest Rates on Inflation
The only thing the Bank of England can really do to control inflation is increase interest rates. This in theory will tackle inflation because it means we spend less and prices drop. But if you're suddenly going to have to pay more money on your mortgage, that's out of your disposable income which means you've got less money to spend on those nice things. So by increasing interest rates, we spend less money and inflation will be dropped down closer to that desired 2% from these high rates right now. Seven members of the monetary policy committee decided they voted for this larger increase due to that kind of inflation and core inflation not changing as expected this month. And that's because they say, look,
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