Bank of England says it will not hesitate to hike interest rates

The bank said it would not hesitate to hike interest rates to curb inflation, after the pound fell to a record low against the US dollar.

It came after Chancellor Kwasi Kwarteng pledged to cut taxes further over the weekend, on top of Friday's mini-budget, where he announced the biggest tax cuts in 50 years.

The plan will require a big increase in government borrowing and concerns from investors about the country's ability to repay debt, which will lead to the value of the pound going down. The cost of borrowing in the UK went up.

Some investors believe that the government's tax cuts will lead to people spending more, which will push up prices. In an effort to limit price rises, the Bank could raise interest rates sooner and faster.

The Bank of EnglandBank of England said it would do a full assessment as to whether it should change interest rates at its next meeting on 3 November, following speculation that it might have intervened earlier in the day.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said that if interest rates rise as predicted, the average household refinancing a two-year fixed rate mortgage in the first half of next year would see monthly payments jump to 1,490 from 863.

If mortgage rates increase to 6% as implied by markets current expectations for the Bank Rate, the average household refinancing a 2 yr fixed rate mortgage in the first half of 2023 will see monthly repayments jump to 1,490 from 863.