Rishi Sunak said there is 'no alternative' to tackling inflation other than raising interest rates as he told Brits feeling the pinch to 'hold our nerve.'
The Bank of England last week piled pressure on mortgage-holders as they raised interest rates to the highest level in nearly 15 years.
The central bank issued its 13th interest rate hike in a row, this time by half a percentage point from 4.5% to 5% in the sharpest increase since February.
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The move surprised many economists who had been expecting a smaller hike of 0.25 percentage points and has left homeowners s bracing themselves for a big jump in their monthly repayments.
It is aimed at reducing inflation, which measures the rate of rising prices and remained at 8.7 percent in May despite efforts to tame it.
Speaking on the BBC’s Sunday With Laura Kuenssberg programme, Mr Sunak said the bank had his 'total support' in their efforts to stamp out inflation which he labelled as 'the enemy.'
“The Bank of England is doing the right thing" he said. "The Bank of England has my total support. Inflation is the enemy for all the reasons that we have talked about. Inflation is what makes people poorer.”
Asked if there is another way than raising interest rates, the Prime Minister said: “There is no alternative to stamping out inflation. I get that this is challenging, but we’ve got to stick to the course.
“I want people to be reassured that we’ve got to hold our nerve, stick to the plan and we will get through this.”
Treasury minister John Glen noted there “isn’t a single quick lever” the Government can pull to tackle inflation. “There isn’t one single thing I can do sat in Whitehall that’s going to resolve this in one month,” he told Sky’s Sophy Ridge On Sunday.
Chancellor Jeremy Hunt last week agreed measures with banks aimed at cooling the mortgage crisis, including allowing borrowers to extend the term of their mortgages or move to an interest-only plan temporarily.
He also said the regulator has told banks that savings rates should be rising, and is “closely monitoring” the issue.
Shadow Levelling Up, Housing and Communities Secretary and Wigan MP Lisa Nandy told Sir Trevor Phillips, hosting Sky's Sophie Ridge show: “Well, the key is whether these measures are mandatory or not, and we understand that they are not.
“We estimate that significant numbers of people won’t be able to access any support at all unless the measures become mandatory so that all mortgage payers, not just some, have access to these measures that give them more flexibility to extend mortgage terms, to be able to shift from one type of mortgage to another.
“We want clarity about whether there’ll be any fees or tariffs attached to changing the terms of your mortgage. We want to ensure that it won’t affect people’s credit rating if they take up these offers.
“These are all questions that the Chancellor has to be able to answer if people are to be confident that there is help coming now and they’ll be able to stay in their homes.”
She added: “But more importantly for far too long, even before the Tories crashed the economy and sent mortgages through the roof, we have had an affordability crisis in this country.
"The reason that people are feeling a lot of more pain now than they were in the 90s is because the average buyer in the 90s was borrowing three or four times their annual salary. Now, they are borrowing around 11 times of their annual salary.
“There is no answer to this crisis without building more homes and that’s why exactly what Labour will do.”
She also urged the Government to intervene to ensure that banks pass on interest rate rises to savers, Lisa Nandy said.
“It can’t be right the banks are passing on interest rate rises to mortgage payers, and not to savers,”she said.
“If you make it more attractive for people to save, then it does have a significant effect in cooling inflation.” The Liberal Democrats said Mr Sunak should help people rather than telling them to be calm amid the dire economic situation.
Lib Dem leader Sir Ed Davey said: “Struggling homeowners will be rightly furious after watching an out-of-touch Prime Minister who has no idea of the pain caused by rising mortgage rates.
“Rishi Sunak’s patronising advice to struggling families coping with the cost-of-living crisis shows why he is not up to the job. People need help, not a Prime Minister instructing them to hold their nerve.”
