has come to us from abroad does not become lasting inflation generated at home. homemade inflation will not make us any better off as a country. those with weak bargaining power will fall further behind. that is why we have increased bank rate. this works through the cost of living in a different way, of course : by increasing the cost of credit, including rates on many mortgages. as mortgagors gradually have to pay higher rates, say as exiting fixed - rate deals are replaced by new ones with higher rates, their money left over for spending on other things will fall. chart 4 : average - quoted rates on new mortgages have risen in 2022 average - quoted rates on two - year fixed - rate mortgages as this chart shows, new mortgage rates are materially higher than they were a year ago, though they have come down from the elevated levels we saw in the autumn. this means that about 1 in 10 households will see their mortgages go up this year. if new mortgage rates rise by 3 percentage points, as market rates currently suggest, the ‘ typical ’ monthly interest payment will go up by just under £250. bank of england outreach programmes listening to people from all parts of the united kingdom it is no surprise that people who talk to us at our outreach events are worried about rising interest rates too. this is not just those on variable rates or those nearing the end of their fixed - term mortgage deals. even if home ownership feels remote for many younger people, they worry that rents could rise as landlords look to pass through higher mortgage rates. some older people have been able to save enough through the pandemic to pay off their mortgages early, but many struggle themselves or worry how younger people will cope. these concerns bring home that, by increasing bank rate by close to 4 percentage points, we have tightened monetary policy significantly. it is having an impact. let me say two things about that. first, with the external shocks that have hit the economy, there is no easy way out. people on lower incomes are struggling to make ends meet. we must ensure that the situation does not get worse through homemade inflation taking hold. the uk labour market remains very tight. since the start of the covid pandemic, we have seen a large increase in the number of people who do not take part in the labour market in this country. the uk labour force has shrunk. while not the focus of my remarks today, this feature of the uk labour

market is an important backdrop to our monetary policy decisions. and if we do too little with interest rates now, we will only have to do more later on. the experience of the 1970s taught us that important lesson. but equally – second – we have to monitor carefully how the tightening we have already done is working its way through the economy to the prices faced by consumers. our outreach events make clear that we need to calibrate monetary policy with great care to return inflation to target sustainably. that is the best contribution monetary policy can make to a fair society. thank you for listening in light of all this, let me conclude with some final thoughts on how we approach the months ahead. at the monetary policy committee ’ s february meeting, we made a very deliberate change to the way we described our view of the outlook. we moved away from what had effectively been a presumption at our previous meetings that further increases in bank rate would be required. in the committee ’ s forecast, headline consumer price inflation was projected to fall sharply over the rest of year, more so in the second half. we recognised, however, that further tightening would be required if there were to be evidence of more persistent inflationary pressures. in that context, we made clear that we have to keep a very close eye on domestic inflationary pressures reflecting a tight labour market. my reading of the evidence since our february meeting – the data we have had for economic activity, the labour market, and inflation – is that the economy is evolving much as we expected it to. inflation has been slightly weaker, and activity and wages slightly stronger, though i would emphasise ‘ slightly ’ in both cases. a further set of data will be coming in before our next monetary policy decision later this month. at this stage, i would caution against suggesting either that we are done with increasing bank rate, or that we will inevitably need to do more. some further increase in bank rate may turn out to be appropriate, but nothing is decided. the incoming data will add to the overall picture of the economy and the outlook for inflation, and that will inform our policy decisions. as always, we will reach our conclusions with a determined focus on achieving the 2 % inflation target on a sustained and lasting basis. i am grateful to james bell, ben broadbent, fabrizio cadamagnani, swati dhingra, jonathan haskel, andrew hauser, andrew hebden, andrew hicks, karen jude, zaar