The Know Daily - Thursday 22 June 2023

_{Read in 5m 24s ∙ Listening to Amy Winehouse}

A 60-year-old tortoise named Tommy ran tortally (sorry!) wild last week when he escaped from his home in the Scottish Borders. Owner Cathryn Scott told the BBC that she was unsure how Tommy managed to cross busy roads and a footbridge to end up a mile away from home - but that she would be “reinforcing his pen”.

💰 Economy update

The Bank of England is widely expected to raise interest rates for a 13th consecutive time later as it seeks to bring inflation under control.

What’s the story?
Figures released yesterday show that inflation (the annual rate at which prices go up) remained unchanged last month at 8.7%. According to The Guardian, this was driven in part by a “sharp rise in the cost of air fares”, as well as “rising prices for secondhand cars”.

Analysts had been expecting inflation to fall, and the surprise figure makes it more likely that the Bank of England will announce a rise in its main interest rate, which currently stands at 4.5%.

What’s the reasoning behind this?
“The theory is that raising interest rates makes it more expensive to borrow money, meaning people have less to spend, and so bringing down demand and therefore easing price rises,” explains the BBC. But the BBC also points out that there is debate over the strategy’s effectiveness.

Why is this such a big deal?
The main interest rate underpins the cost of variable rate mortgages and other loans, so any raise would put further financial pressure on homeowners or households with debts. While eight out of 10 mortgage customers hold a fixed-rate mortgage, first-time buyers and those with deals soon coming to an end face a sharp rise in repayments.

And a new report from the Institute for Fiscal Studies has pointed out that renters are also seeing “very large increases” in their rent, as landlords pass on the cost of rising mortgages.

The government has so far ruled out introducing major financial support to mortgage holders, saying that the priority is to bring inflation down.