Kwasi Kwarteng 'confident' after mini-budget as Bank of England Chief warns of ‘significant’ response
Chancellor Kwasi Kwarteng has said he's 'confident' his economic strategy will work, as the Bank of England's Chief Economist warns of a 'significant’ response to the newly announced tax cuts.
Kwarteng made the comments during a meeting with top bankers – a meeting that was initially scheduled to discuss regulation within the city.
Sitting down with the heads of financial firms including Aviva, BlackRock and JPMorgan, the discussions came a day after the pound hit a record low against the US dollar – marking its lowest levels since 1985.
The reaction follows last week's mini-budget, which saw the newly appointed Chancellor introduce a host of measures, including scrapping of the 45p tax rate for around 660,000 of the highest earners.
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The measures have prompted the Bank of England's Chief Economist, Huw Pill, to warn of a ‘significant’ response to the measures.
In simple terms, this news is likely to mean a notable increase in interest rates as a result of the tax cuts.
Pill also explained that he wanted to "flag clearly" that the government’s mini-budget announcement will “act as a stimulus” for the UK economy, forcing the bank to implement measures.
The economist also argued that the Bank of England should wait until its next scheduled meeting – which takes place during the first week of November – rather than announcing an impromptu emergency hike.