Jeremy Hunt has warned that the high inflation in the UK will prevent pre-election tax cuts this autumn amid signals that the Bank of England will raise interest rates again to ease cost of living pressures.
Speaking in India, the Chancellor said he was wary about "pumping extra money into people's pockets" as that could "pump extra money into the economy" and push up prices, keeping inflation higher for longer.
He added money would be tight in any event because of higher inflation and the impact of rising interest rates on the Government's debt interest payments.
On 22 November, Hunt is due to outline fiscal and tax plans to Parliament, which he said would focus on "bringing down inflation and delivering the Prime Minister's goal to halve inflation and the Bank of England's target to get it down to 2%".
The Chancellor's comments came as Catherine Mann, one of the nine members of the Bank's rate-setting monetary policy committee (MPC), said she was prepared to raise interest rates too far than risk not increasing them enough and allowing inflation to become "more deeply embedded".
Mann has tended to support tighter monetary policy of the MPC since it started to raise interest rates from the record low of 0.1% in December 2021.
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