UK borrowers brace for more expensive loans as inflation fails to fall as anticipated
Associated PressLONDON — U.K. borrowers will be bracing themselves for further increases in lending costs after official figures Wednesday showed inflation failing to fall as anticipated in May. Higher interest rates help lower inflation by making it more expensive for households and businesses to borrow, meaning they potentially spend less, thereby reducing demand pressure on prices. “We know how much high inflation hurts families and businesses across the country, and our plan to halve the rate this year is the best way we can keep costs and interest rates down,” Treasury chief Jeremy Hunt said. “It’s a ticking time bomb as 1.4 million borrowers will see an end to their low fixed rates this year,” said Jamie Elvin, director at mortgage broker Strive Mortgages. Like other central banks, the Bank of England has aggressively raised borrowing rates over the past 18 months or so after inflation spiked sharply, first because of bottlenecks caused by the coronavirus pandemic and then because of Russia’s invasion of Ukraine, which sent energy and food prices surging.