Brits braced for more cost of living pain with interest rates to SOAR by November, Bank of England boss warns

HOUSEHOLDS have been put on notice interest rates are on the rise if the Middle East war continues to rage, Bank chiefs say. Rates were kept on hold at 3.75 per cent as the Bank of England grapples to keep control of spiralling prices. Bank chief Andrew Bailey warns of interest rate hikes if the Iran war continues Credit: AP Middle East conflict has triggered a global energy crisis pushing up prices Credit: AFP Inflation is now forecast to hit four per cent at the start of next year – double the target rate – amid the fall-out from the Iran war energy crisis. Bank governor Andrew Bailey said “the longer this volatility persists, the bigger the impact it will have on inflation”. Sign up for the Politics newsletter Thank you! He added it could mean “the more likely it is we will need to raise Bank Rate to ensure that inflation falls back to our 2% target”. But he added that there has only been a “limited affect” on price hikes in shops and workers asking for pay hikes in what are called “second-round effects”. The frustrated Bank boss feared an increase in the rate due to a “loss of urgency to find solutions” between America and Iran. The nine-member panel were split 6-3 in favour of keeping the rates on hold. It comes after inflation rose to 3.1 per cent last month, up from 2.9 per cent in September. But experts say the Bank is likely to raise rates at both their November and February meetings in an effort to bear down on inflation. Most read in The Sun The bank’s panel now expect inflation to rise to about 3.75% by the end of this year and peak at about 4% by the start of 2027. Economist Suren Thiru, of the Institute of Chartered Accountants in England and Wales, said the Bank has left the “door wide open” to a November rate hike. “Interest rates are at a critical cliff-edge moment. While policy could still remain on hold this year, persistent US-Iran hostilities mean the risk of a rate hike has shifted from a possibility to a probability.” The rise in interest rates will add to the cost of living pressures for both households and business. Andy Burnham has said that the Budget at the end of October will be “challenging” and there are “difficult decisions” to be made. AI-driven consumer spend to hit £370 billion a year by 2030, report says ONE in ten consumers will be using AI to do their shopping and pay by the end of the decade, a new report reveals. The technology is being used to compare and review sought-after items as business leaders are warned to keep up with the changes. Millions of businesses in sectors such as retail and hospitality could miss out on a £370 billion a year payday. It also found that one in three teens will be using an AI shopping assistant. The Mastercard report shows more than six in ten young people believe AI will significantly change the way their age cohort shops. Simon Forbes, President, Mastercard UK & Ireland. “AI increasingly helps people decide what to buy; tomorrow it will help do the purchasing for them too. “As these technologies develop, solutions like Mastercard Agent Pay are helping ensure those transactions can happen securely, transparently and with consumer control. “This report is an invitation for businesses to take small practical steps today to prepare for that future together.” Meanwhile, there was a drop in borrowing costs yesterday as the Bank announced a shake-up of its government bond selling programme. The current gilt auctions will be paused until the decision is finalised. Thirty-year bonds fell to its lowest level for more than a month following the news. Comment now