October’s money and credit figures highlight how higher interest rates are starting to influence the economy. Higher interest rates are weakening the demand for credit, especially for mortgages, and are encouraging households to save a bit more. That will be pleasing news for the Bank of England on its mission to bring inflation back down to its 2% target. But the fact that inflation remains at a 41-year high of 11.1% means it will need to raise interest rates further yet, from 3.00% now to a peak of 4.50%.
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