Hunt must commit Treasury and BoE to review of rate rise impact, Labour shadow City minister urges
Chancellor Jeremy Hunt has been urged to commit the Treasury and the Bank of England to a review of “sharp interest rate rises” in light of the ongoing banking turmoil.
Shockwaves have rocked the financial sector in the past weeks with the collapse of the US arm of tech bank SVB – plus the buyout of the UK wing and the takeover of Credit Suisse.
Now shadow City minister Tulip Siddiq has written to the Treasury, urging Hunt to “proactively review” the effect of sharp interest rate rises and wider global uncertainty.
The Labour MP wrote on Twitter: “I have written to the Chancellor in light of the recent difficulties at SVB and Credit Suisse.
“Labour is calling on the Government to proactively review what sharp interest rate rises and wider uncertainty in the global banking system mean for our financial sector and economy.”
In her letter, Siddiq wrote that recent difficulties were a “worrying development” and asked him to give “urgent clarity as to how you are monitoring risk in this fast moving landscape”.
She asked: “Will you now commit the Treasury and Bank of England to a systemic review of the impact of interest rate rises and the wider uncertainty in the global financial system on our financial sector and banking system?”
Rising interest rates have put increasing pressure on the financial sector over the last few weeks.
Silicon Valley Bank collapsed because a large portfolio of bonds decreased in value as a result of rising rates.
There are fears that continuing to hike rates may pile pressure on a sector already creaking under the pressure of more expensive borrowing costs.
The Treasury and Bank of England have been contacted for comment.