Bigger tax hikes could mean lower interest rates

Bank of England

Bank of England chief economist Huw Pill said on Monday that a bigger tax raid by Jeremy Hunt in next week’s Autumn Statement could dampen down demand and lower the peak for interest rates. “We would set interest rates a little bit lower, we speed the economy up, we boost spending through monetary policy in order to offset that effect and we still ensure that inflation is back at 2%,” he said, discussing a scenario where the Chancellor puts up taxes by more than the Bank expects.

Source: Daily Telegraph

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