Rees-Mogg looks to urge ‘tighter’ monetary policy from BoE

by | May 13, 2022

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Jacob Rees-Mogg, the Brexit minister, looked to rule out emergency support to help tackle the soaring cost of living crisis on Friday, as he called on the Bank of England to increase interest rates.
During a round of morning media interviews, the MP argued the right responses to soaring inflation were “tighter monetary policy, which is the responsibility of the Bank of England, and constrained fiscal policy”.

He told Times Radio: “An emergency budget is not likely to be an answer to this.”

He also hailed policies followed by Margaret Thatcher’s Conservative government of the 1980s, telling GB News: “The problem with spending more money is you make the inflationary problem worse rather than better.

 

“This is very difficult for politicians, because with a cost of living problem, there aren’t easy, popular things to do, and if you do those you make the problem worse.

“You have to do, as Margaret Thatcher showed in the 1980s, the things that need to be done.

“You can’t take short-term, expensive measures because they just [make ]things worse.”

 

On Tuesday, the National Institute of Economic and Social Research warned that 1.5m people faced being unable to pay food or energy bills this year, and said emergency financial support and an increase Universal Credit was urgently needed to prevent families sliding into destitution.

Business leaders across sectors and companies, from Tesco to Scottish Power, have also urged the government to do more to help.

Interest rates – currently at a record low of 1% – reached a high of 15% in 1981 while unemployment hit 3m. Rates briefly dipped below 8% towards the end of the decade, but were over 14% by 1989. Government was responsible for setting interest rates until 1997, when then chancellor Gordon Brown handed responsibility to the Bank of England.

 

Rees-Mogg also backed government plans to sack 91,000 civil servants, telling Sky News it was a “perfectly reasonable and sensible ambition”. He argued that staffing levels had increased since 2016, primarily to help with Brexit, but “the administration, negotiations, most of the work in relation to Brexit has been completed”.

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