We'll bring to a close today's live page on the looming recession in the UK.
But before we go here are the key headlines of the day:
Bank of England Governor Andrew Bailey has defended its interest rate rise to 1.75% yesterday, saying there is a real risk of soaring prices becoming "embedded"
The UK is forecast to fall into recession this year, with the longest downturn since 2008 predicted
Our experts - Simon Read, Dharshini David and Beth Timmins - have been answering your questions on what it mean for workers, homeowners, families and businesses
"Many more billions [will be needed] to support households" through current inflation rates, Paul Johnson, a leading economist and director of the independent Institute for Fiscal Studies, told the BBC
The supporters of the two contenders to become our next PM have continued to disagree over how to combat the UK's soaring inflation and recession threat
This afternoon's Your questions answered special page was written by Jack Burgess, Sam Hancock, Catherine Evans, Adam Durbin, Jo Couzens and James Fitzgerald. The editors were Andrew Humphrey, Nathan Williams, Chris Giles and James Harness.
Video caption: Bank of England governor defends interest rate hikeBank of England governor defends interest rate hike
Andrew Bailey, the governor of the Bank of England, has been speaking more today about the decision to raise interest rates, saying there is a "real risk" of soaring prices becoming "embedded".
As we've been reporting, interest rates have risen to 1.75% - the biggest rise in 27 years - with inflation now set to hit more than 13%.
Quote Message: The real risk we're responding to is that inflation becomes embedded and it doesn't come down in the way that we would otherwise expect."
The real risk we're responding to is that inflation becomes embedded and it doesn't come down in the way that we would otherwise expect."
'Our savings have been eroded'
BBCCopyright: BBC
We've also heard from a couple, both pensioners, who told the BBC they’ll have to plan a tight budget then “see how things go”.
“There’s not a great deal we can do about it is there? The government does everything themselves.
“Our savings have been eroded.
“We’re just two people with a very small voice.”
'I've had to start cutting back'
BBCCopyright: BBC
A rise in interest rates has been unwelcome news for many.
So what will happen if prices continue to rise?
One woman who works as a care manager in Wales told the BBC: "The income that we're getting at the moment is just not enough to afford the bills, the rent... all the food prices, the fuel prices... it's really, really difficult.
"The prices are so high now that I've had to start cutting back. So if they do keep going up we're going to see a lot more homelessness, we're going to see a lot more people applying for benefits.
"The majority of people are not gonna be able to afford to actually live a stable, normal life.
"It's going to be really bad if it keeps going up."
Your questionsanswered
Will my credit card debt cost more?
BBCCopyright: BBC
Last question now, coming from Aaron in Londonderry, who asked Money Saving Expert's Gareth Shaw:
What does interest rates going up mean for the price of my borrowing? I have an outstanding balance on my credit card, which I'm only able to pay off slowly due to the rising cost of living. Does this mean I will end up paying more?
It really depends on the terms of your credit card.
Some credit card providers are pretty explicit that their interest rates will be tied to the Bank of England base rate. Others do not tie it to the Bank of England base rate.
There are products out there that can help you minimise the amount of interest that you pay on credit card debt. They're called 0% balance transfer credit cards.
If you're paying interest on your credit card debt you cannot afford not to look at these types of cards because your repayments are currently paying off interest and debt.
When you shift your debt to a 0% balance transfer credit card, all of your repayments are reducing your debt.
There are ways to find out if you're eligible before you apply.
I would strongly suggest looking at those.
WATCH: Just about getting by on my pension
Video content
Video caption: Cost of living: Loughborough residents say how they cope with rising cost of livingCost of living: Loughborough residents say how they cope with rising cost of living
It is market day in Loughborough. We've been in the Leicestershire town finding
out how people are coping with the rising cost of living.
Many seem to be taking it in their stride. One resident says his vehicle "costs a small fortune" to fill with petrol, but is managing to get by on his pension, "just".
Another tells us he's just going "to live with it", and the government isn't able to do anything to help: "They just keep talking."
Your questionsanswered
Are prices rising because of the war?
Another question now from BBC viewer Christine, who asks Prof Hilary Ingham:
Is it purely the effect of the war in Ukraine that's affecting so many economies and people?
No, it's not solely Ukraine - but obviously that is having a big impact.
Ukraine is a very big producer of grain and this also feeds into animal feed. Things like chickens are becoming more expensive.
But obviously there's the gas problem, in particular with Russia cutting back on what it's sending through Nordstream 1, so that is affecting energy prices severely.
Brexit has caused labour shortages, so in some sectors, employers are having to raise wages to attract employees.
So it's a combination of factors - all are working against the consumer at this point in time.
ReutersCopyright: Reuters
'I appreciate any help - prices are out of control'
BBCCopyright: BBC
Not everyone sees the rise in interest rates as bad news.
A small business owner in Cardiff told the BBC he welcomes the news, as the prices of his materials have all gone up.
“Whatever the government is trying to do to cushion inflation is greatly appreciated because everything right now is just spiralling out of control," he said.
“I look at it as any help I can get to bring down the costs, I can pass the savings on to my customers.”
But if there’s a recession, as the Bank predicts, he said he’s going to “lose business… I might be queuing up at the unemployment centre”.
Business group warns of power vacuum during crisis
PA WireCopyright: PA Wire
The prime minister and chancellor have been accused of being 'missing in action'Image caption: The prime minister and chancellor have been accused of being 'missing in action'
The head of the Confederation of British Industry (CBI), which represents the interests of business-owners, is warning of a "vacuum" in government at a time of economic crisis.
"We cannot wait until 5 September for action," Tony Danker tells BBC Radio 4's World at One programme.
He's referring to the date on which the country's next prime minister will be known, following the conclusion of the Conservative leadership contest.
"We need the current prime minister and the current chancellor to fill that vacuum," Danker adds.
Both Boris Johnson and Nadhim Zahawi are currently on holiday - although Zahawi insisted yesterday that he was continuing to work while abroad.
Your questionsanswered
Are big businesses profiting from individuals' misery?
Simon Read
Personal Finance Reporter
PA ImagesCopyright: PA Images
Stephen from Nottingham wants to know whether big businesses are profiting at the expense of individuals.
The BBC and other media seem to be pinning the inflation rate on Russia's invasion of Ukraine, and due to the economy largely shutting down over
Covid. But on social media, there is a discussion around
corporations making huge profits. People say this is causing inflation because a lot of these businesses face little competition and can raise prices whenever they want. Is this
true?
When inflation bites and things become more expensive, people
naturally look around for somebody to blame.
Big corporates posting massive profits are easy targets. “If
they’re making that much money, why can’t they cut prices,” consumers ask.
Meanwhile I've seen growing use on social media of phrases such
as "pandemic profiteers" or "greedflation".
But the accusations don't seem to hold up when you look at the
economics behind the profits.
Profits help companies grow, which in turn helps other companies
and suppliers, investors, as well as workers and the wider economy.
In short the current global system needs businesses to be
successful to keep economies on track.
Forcing them to reduce prices or cut profits could stifle growth
and investment which, in turn, could lead to economic contraction.
The reason why Russia's invasion of Ukraine is more likely to be
mentioned in relation to inflation is that it has massively disrupted energy
supplies, and gas and electricity are a major part of consumer expenditure.
Another issue to bear in mind is the UK’s skills shortage after
Brexit, which has left many industry sectors facing problems because of a lack
of workers.
Meanwhile, supply chain problems caused by ongoing global
uncertainty are hitting many companies' products.
That leads to a scarcity which puts up prices as demand
outstrips the available supply.
'We're struggling to live'
BBCCopyright: BBC
A fall in living costs can't come soon enough for Lucy Cogle
from Yorkshire.
The pensioner already switched off her heating last winter
because she couldn’t afford the bills.
She says this winter she'll again be relying on her dogs to keep
her warm.
"It was absolutely freezing," she says.
"We had damp coming up through the windows and I made
patchwork blankets for us.
"We're just struggling to live."
BBCCopyright: BBC
Your questionsanswered
What's embedded inflation?
Money Saving Expert's deputy editor Gareth Shaw and professor of economics Hilary Ingham have joined the BBC's Martine Croxall to answer more of your questions on the BBC News Channel.
The first is from Martine herself, who asks Prof Ingham:
What does the Bank of England governor mean when he talks about embedded inflation?
It means there's inflationary pressure in the economy which is embedded in that we don't expect it to go away any time soon.
A few months back, the governor was actually talking about inflation being transitory, ie. something that was only temporary, that he was expecting to turn back to much lower levels.
But now what they're thinking is are these pressures for prices to keep on rising, so we have got embedded inflation, ie. it's not something that is just going to disappear overnight.
Increasing tax and interest rates 'makes no sense' - Kwarteng
BBCCopyright: BBC
Raising taxes while interest rates are rising "doesn't make any sense", insists Business Secretary Kwasi Kwarteng.
He said Liz Truss, who he is backing in the Tory party leadership contest, has been talking about the risk of recession since the start.
"[It] means that you can’t have rising interest rates, which we saw yesterday, and also have tighter fiscal policy," he said.
"Inflation means you have less of your money to spend – your income is being squeezed – nobody I’ve ever spoken to until about a week ago has said the way to deal with that is to take even more of people’s money through tax, that doesn’t make any sense."
He said one of Truss's proposals was not having a tax cut but "actually not having a tax increase".
"That’s not inflationary, essentially saying that a tax cut
that has been pencilled in won’t happen," said Kwarteng.
He pointed out no other G7 countries were raising both interest rates and tax to deal with inflation.
Kwarteng also says he expects there will be an emergency Budget to help people - although it probably won't happen not until September.
He insisted he was in constant contact with the prime minister and chancellor while they both were abroad.
Overwhelming priority must be inflation, Jenrick says
BBCCopyright: BBC
Former housing secretary Robert Jenrick told the BBC earlier that the "overwhelming
priority" for the government must be tackling inflation.
Jenrick, who is backing Rishi Sunak for prime minister, repeated his favoured candidate's line that the “dashboard
is flashing red on the British economy”.
In an apparent reference to Sunak’s opponent Liz Truss’ statement
that a recession isn’t inevitable, he also said that “we shouldn't fool
ourselves into believing that all is going to be fine”.
Jenrick also argued that while “unfunded tax cuts” now were “attractive”, they “seem less relevant" in the context of the overall state of the economy.
He said the government must work out if there was anything more that can be done can do to reduce inflation, beyond the actions already taken by the
Bank of England to hike interest rates.
In a further critique of Truss’ policy platform, Jenrick reiterated
the Sunak camp’s belief that “the one thing we certainly can do is to do no
further harm and not to do any tax rises that might add to inflation”.
Jenrick also said the movement must “think very deeply about what
we can do to help the poorest and most vulnerable households through the winter”.
Billions needed to support households, economist warns
Let's get some more reaction from the political world now, with Paul Johnson, a leading economist and director of the
independent Institute for Fiscal Studies, saying there should be a focus on tackling inflation rather than tax cuts during the Tory leadership race.
"Many more billions [will be needed] to support
households" through current inflation rates, he told the BBC earlier.
Johnson also rejected the idea cuts could be funded in part by
"fiscal headroom", as suggested by a number of the MPs who battled it
out to become the next PM – and including Liz Truss, who's still in the race.
"What [the leadership candidates are] talking about is that
the Office for Budget Responsibility [in March] said we'd be borrowing about
£30bn less than we absolutely could to meet the fiscal target of a balanced
current budget in a few years' time," he said.
But he added that this was "highly uncertain" and now
"massively out of date", given the economy was heading for recession.
Rishi Sunak, who has trailed in recent polls, has repeatedly said he would prioritise bringing down inflation before cutting taxes if he became PM.
Your questionsanswered
What is Brexit's impact on the UK's economic problems?
Simon Read
Personal Finance Reporter
A question now from Susan Ward, who asks:
How much is
Brexit contributing to the economic problems in the UK?
There are a number
of factors to bear in mind.
One direct impact of
Brexit was the number of EU migrants who left the UK, leaving the
country with a shortage of skilled workers across a number of industries.
The hospitality
industry has been particularly badly hit but other sectors have also reported
problems, such as construction and haulage.
A shortage of workers
has led to cutbacks or reduced service, which has hit profits and had a
knock-on effect across the economy.
The new hard border
introduced between Britain and the EU has also had a detrimental effect on
business with delays affecting deliveries and therefore profits.
Red tape and new
restrictions have been bad news for many British companies which report losing
customers and orders and, in the worst case, having to go out of business.
There’s also the
rising cost of the UK's Brexit divorce bill from leaving the EU. The latest government estimate last month put it at £42.5bn. That’s cash
taken out of the UK economy.
Your questionsanswered
How does increasing interest rates tackle inflation?
Beth Timmins
Finance reporter
Next, another question relating to using interest rates to control inflation, from Kevin Fryers in Hampshire:
If inflation is caused largely by the war in Ukraine and not the economy being overheated, how does putting interest rates up help?
Inflation, which measures how fast the cost of living rises over time, is now set to hit more than 13% in the UK.
This inflation rise has been reflected in major Western economies, as the cost of energy and food has been pushed up by dwindling supplies caused by the Russian-Ukraine conflict.
Such a figure has encouraged the Bank of England to increase interest rates.
The idea is that when borrowing is more expensive, people will have less money to spend. As a result, they will buy fewer things, and prices will stop rising as fast. Increasing interest rates is one way to try and control inflation as it raises borrowing costs.
But in the UK, for example, about 2.2 million homeowners with mortgages linked to the Bank of England's base rate would see repayments go up, putting further pressure on household budgets that are already being squeezed by the cost of living.
Time to fix?
Simon Read
Personal Finance Reporter
Mortgage borrowers are always faced with the perennial question
of when is a good time to fix their rate.
The advantage of a fixed rate is that you know how much monthly
repayments will be for the length of the fix, which can really help with
budgeting.
But the danger is of fixing at too high a rate when you could be
saving money every month with a cheaper variable deal.
The average five-year fixed rate mortgage has now breached 4%,
according to rates analysts Moneyfacts.co.uk.
Experts expect rates to climb even more after yesterday’s half a
percentage point rise in the Bank rate.
Does that mean you should look to get a decent fix rate now?
Yes, reckons Rachel Springall, finance expert at
Moneyfacts.co.uk.
"Borrowers who have not locked into a fixed rate would be
wise to move quickly to secure a new deal as interest rates continue to climb,"
she said.
Getty ImagesCopyright: Getty Images
How will a recession hit the UK housing market?
PACopyright: PA
The Bank of England has warned Britain will lurch into recession later this year, but how will that affect the housing market?
It will be the first UK recession since 2020 - at the height of the Covid crisis.
That actually boosted property prices as working from home encouraged both house movers and buyers in a race for space.
The housing market has been rampant ever since as people taking out a mortgage took advantage of low interest rates and a stamp duty holiday, but a recession could finally put the brakes on it.
The latest figures from the Halifax bank published on Friday showed that prices climbed 11.8% in the 12 months to July.
However, they slipped by 0.1% month-on-month in July - and that was before the Bank of England raised interest rates to 1.75% to tackle soaring inflation.
Tony Hall wants to know in what way people are going to be assisted by yesterday's announcements from the Bank of England.
How does increasing interest rates - affecting mortgages and other loans - help the population cope with a higher cost of living?
The Bank has introduced the biggest interest hike since 1995 to try to tackle inflation.
This adds significant costs to borrowers but is meant to subdue the fast pace of price growth and wage increases.
However, as the energy price increases are largely a supply problem, the Bank has less power to control this factor which is driving up the cost of living.
Live Reporting
Edited by Andrew Humphrey
All times stated are UK
-
Bank of England Governor Andrew Bailey has defended its interest rate rise to 1.75% yesterday, saying there is a real risk of soaring prices becoming "embedded"
-
The UK is forecast to fall into recession this year, with the longest downturn since 2008 predicted
-
Our experts - Simon Read, Dharshini David and Beth Timmins - have been answering your questions on what it mean for workers, homeowners, families and businesses
-
"Many more billions [will be needed] to support households" through current inflation rates, Paul Johnson, a leading economist and director of the independent Institute for Fiscal Studies, told the BBC
-
The supporters of the two contenders to become our next PM have continued to disagree over how to combat the UK's soaring inflation and recession threat
Video caption: Bank of England governor defends interest rate hikeBank of England governor defends interest rate hike 
BBCCopyright: BBC 
BBCCopyright: BBC Your questions answered
BBCCopyright: BBC Video caption: Cost of living: Loughborough residents say how they cope with rising cost of livingCost of living: Loughborough residents say how they cope with rising cost of living Your questions answered
ReutersCopyright: Reuters 
BBCCopyright: BBC 
PA WireCopyright: PA Wire The prime minister and chancellor have been accused of being 'missing in action'Image caption: The prime minister and chancellor have been accused of being 'missing in action' Your questions answered
PA ImagesCopyright: PA Images 
BBCCopyright: BBC 
BBCCopyright: BBC Your questions answered 
BBCCopyright: BBC 
BBCCopyright: BBC Your questions answered
Your questions answered
Getty ImagesCopyright: Getty Images 
PACopyright: PA Your questions answered
Getty ImagesCopyright: Getty Images
Latest PostThanks for joining us
We'll bring to a close today's live page on the looming recession in the UK.
But before we go here are the key headlines of the day:
This afternoon's Your questions answered special page was written by Jack Burgess, Sam Hancock, Catherine Evans, Adam Durbin, Jo Couzens and James Fitzgerald. The editors were Andrew Humphrey, Nathan Williams, Chris Giles and James Harness.
You can read more about the interest rate hike, recession forecast and rising cost of living here.
WATCH: Bank governor defends interest rate hike
Video content
Andrew Bailey, the governor of the Bank of England, has been speaking more today about the decision to raise interest rates, saying there is a "real risk" of soaring prices becoming "embedded".
As we've been reporting, interest rates have risen to 1.75% - the biggest rise in 27 years - with inflation now set to hit more than 13%.
'Our savings have been eroded'
We've also heard from a couple, both pensioners, who told the BBC they’ll have to plan a tight budget then “see how things go”.
“There’s not a great deal we can do about it is there? The government does everything themselves.
“Our savings have been eroded.
“We’re just two people with a very small voice.”
'I've had to start cutting back'
A rise in interest rates has been unwelcome news for many.
So what will happen if prices continue to rise?
One woman who works as a care manager in Wales told the BBC: "The income that we're getting at the moment is just not enough to afford the bills, the rent... all the food prices, the fuel prices... it's really, really difficult.
"The prices are so high now that I've had to start cutting back. So if they do keep going up we're going to see a lot more homelessness, we're going to see a lot more people applying for benefits.
"The majority of people are not gonna be able to afford to actually live a stable, normal life.
"It's going to be really bad if it keeps going up."
Will my credit card debt cost more?
Last question now, coming from Aaron in Londonderry, who asked Money Saving Expert's Gareth Shaw:
What does interest rates going up mean for the price of my borrowing? I have an outstanding balance on my credit card, which I'm only able to pay off slowly due to the rising cost of living. Does this mean I will end up paying more?
It really depends on the terms of your credit card.
Some credit card providers are pretty explicit that their interest rates will be tied to the Bank of England base rate. Others do not tie it to the Bank of England base rate.
There are products out there that can help you minimise the amount of interest that you pay on credit card debt. They're called 0% balance transfer credit cards.
If you're paying interest on your credit card debt you cannot afford not to look at these types of cards because your repayments are currently paying off interest and debt.
When you shift your debt to a 0% balance transfer credit card, all of your repayments are reducing your debt.
There are ways to find out if you're eligible before you apply.
I would strongly suggest looking at those.
WATCH: Just about getting by on my pension
Video content
It is market day in Loughborough. We've been in the Leicestershire town finding out how people are coping with the rising cost of living.
Many seem to be taking it in their stride. One resident says his vehicle "costs a small fortune" to fill with petrol, but is managing to get by on his pension, "just".
Another tells us he's just going "to live with it", and the government isn't able to do anything to help: "They just keep talking."
Are prices rising because of the war?
Another question now from BBC viewer Christine, who asks Prof Hilary Ingham:
Is it purely the effect of the war in Ukraine that's affecting so many economies and people?
No, it's not solely Ukraine - but obviously that is having a big impact.
Ukraine is a very big producer of grain and this also feeds into animal feed. Things like chickens are becoming more expensive.
But obviously there's the gas problem, in particular with Russia cutting back on what it's sending through Nordstream 1, so that is affecting energy prices severely.
Brexit has caused labour shortages, so in some sectors, employers are having to raise wages to attract employees.
So it's a combination of factors - all are working against the consumer at this point in time.
'I appreciate any help - prices are out of control'
Not everyone sees the rise in interest rates as bad news.
A small business owner in Cardiff told the BBC he welcomes the news, as the prices of his materials have all gone up.
“Whatever the government is trying to do to cushion inflation is greatly appreciated because everything right now is just spiralling out of control," he said.
“I look at it as any help I can get to bring down the costs, I can pass the savings on to my customers.”
But if there’s a recession, as the Bank predicts, he said he’s going to “lose business… I might be queuing up at the unemployment centre”.
Business group warns of power vacuum during crisis
The head of the Confederation of British Industry (CBI), which represents the interests of business-owners, is warning of a "vacuum" in government at a time of economic crisis.
"We cannot wait until 5 September for action," Tony Danker tells BBC Radio 4's World at One programme.
He's referring to the date on which the country's next prime minister will be known, following the conclusion of the Conservative leadership contest.
"We need the current prime minister and the current chancellor to fill that vacuum," Danker adds.
Both Boris Johnson and Nadhim Zahawi are currently on holiday - although Zahawi insisted yesterday that he was continuing to work while abroad.
Are big businesses profiting from individuals' misery?
Simon Read
Personal Finance Reporter
Stephen from Nottingham wants to know whether big businesses are profiting at the expense of individuals.
The BBC and other media seem to be pinning the inflation rate on Russia's invasion of Ukraine, and due to the economy largely shutting down over Covid. But on social media, there is a discussion around corporations making huge profits. People say this is causing inflation because a lot of these businesses face little competition and can raise prices whenever they want. Is this true?
When inflation bites and things become more expensive, people naturally look around for somebody to blame.
Big corporates posting massive profits are easy targets. “If they’re making that much money, why can’t they cut prices,” consumers ask.
Meanwhile I've seen growing use on social media of phrases such as "pandemic profiteers" or "greedflation".
But the accusations don't seem to hold up when you look at the economics behind the profits.
Profits help companies grow, which in turn helps other companies and suppliers, investors, as well as workers and the wider economy.
In short the current global system needs businesses to be successful to keep economies on track.
Forcing them to reduce prices or cut profits could stifle growth and investment which, in turn, could lead to economic contraction.
The reason why Russia's invasion of Ukraine is more likely to be mentioned in relation to inflation is that it has massively disrupted energy supplies, and gas and electricity are a major part of consumer expenditure.
Another issue to bear in mind is the UK’s skills shortage after Brexit, which has left many industry sectors facing problems because of a lack of workers.
Meanwhile, supply chain problems caused by ongoing global uncertainty are hitting many companies' products.
That leads to a scarcity which puts up prices as demand outstrips the available supply.
'We're struggling to live'
A fall in living costs can't come soon enough for Lucy Cogle from Yorkshire.
The pensioner already switched off her heating last winter because she couldn’t afford the bills.
She says this winter she'll again be relying on her dogs to keep her warm.
"It was absolutely freezing," she says.
"We had damp coming up through the windows and I made patchwork blankets for us.
"We're just struggling to live."
What's embedded inflation?
Money Saving Expert's deputy editor Gareth Shaw and professor of economics Hilary Ingham have joined the BBC's Martine Croxall to answer more of your questions on the BBC News Channel.
The first is from Martine herself, who asks Prof Ingham:
What does the Bank of England governor mean when he talks about embedded inflation?
It means there's inflationary pressure in the economy which is embedded in that we don't expect it to go away any time soon.
A few months back, the governor was actually talking about inflation being transitory, ie. something that was only temporary, that he was expecting to turn back to much lower levels.
But now what they're thinking is are these pressures for prices to keep on rising, so we have got embedded inflation, ie. it's not something that is just going to disappear overnight.
Increasing tax and interest rates 'makes no sense' - Kwarteng
Raising taxes while interest rates are rising "doesn't make any sense", insists Business Secretary Kwasi Kwarteng.
He said Liz Truss, who he is backing in the Tory party leadership contest, has been talking about the risk of recession since the start.
"[It] means that you can’t have rising interest rates, which we saw yesterday, and also have tighter fiscal policy," he said.
"Inflation means you have less of your money to spend – your income is being squeezed – nobody I’ve ever spoken to until about a week ago has said the way to deal with that is to take even more of people’s money through tax, that doesn’t make any sense."
He said one of Truss's proposals was not having a tax cut but "actually not having a tax increase".
"That’s not inflationary, essentially saying that a tax cut that has been pencilled in won’t happen," said Kwarteng.
He pointed out no other G7 countries were raising both interest rates and tax to deal with inflation.
Kwarteng also says he expects there will be an emergency Budget to help people - although it probably won't happen not until September.
He insisted he was in constant contact with the prime minister and chancellor while they both were abroad.
Overwhelming priority must be inflation, Jenrick says
Former housing secretary Robert Jenrick told the BBC earlier that the "overwhelming priority" for the government must be tackling inflation.
Jenrick, who is backing Rishi Sunak for prime minister, repeated his favoured candidate's line that the “dashboard is flashing red on the British economy”.
In an apparent reference to Sunak’s opponent Liz Truss’ statement that a recession isn’t inevitable, he also said that “we shouldn't fool ourselves into believing that all is going to be fine”.
Jenrick also argued that while “unfunded tax cuts” now were “attractive”, they “seem less relevant" in the context of the overall state of the economy.
He said the government must work out if there was anything more that can be done can do to reduce inflation, beyond the actions already taken by the Bank of England to hike interest rates.
In a further critique of Truss’ policy platform, Jenrick reiterated the Sunak camp’s belief that “the one thing we certainly can do is to do no further harm and not to do any tax rises that might add to inflation”.
Jenrick also said the movement must “think very deeply about what we can do to help the poorest and most vulnerable households through the winter”.
Billions needed to support households, economist warns
Let's get some more reaction from the political world now, with Paul Johnson, a leading economist and director of the independent Institute for Fiscal Studies, saying there should be a focus on tackling inflation rather than tax cuts during the Tory leadership race.
"Many more billions [will be needed] to support households" through current inflation rates, he told the BBC earlier.
Johnson also rejected the idea cuts could be funded in part by "fiscal headroom", as suggested by a number of the MPs who battled it out to become the next PM – and including Liz Truss, who's still in the race.
"What [the leadership candidates are] talking about is that the Office for Budget Responsibility [in March] said we'd be borrowing about £30bn less than we absolutely could to meet the fiscal target of a balanced current budget in a few years' time," he said.
But he added that this was "highly uncertain" and now "massively out of date", given the economy was heading for recession.
Rishi Sunak, who has trailed in recent polls, has repeatedly said he would prioritise bringing down inflation before cutting taxes if he became PM.
What is Brexit's impact on the UK's economic problems?
Simon Read
Personal Finance Reporter
A question now from Susan Ward, who asks:
How much is Brexit contributing to the economic problems in the UK?
There are a number of factors to bear in mind.
One direct impact of Brexit was the number of EU migrants who left the UK, leaving the country with a shortage of skilled workers across a number of industries.
The hospitality industry has been particularly badly hit but other sectors have also reported problems, such as construction and haulage.
A shortage of workers has led to cutbacks or reduced service, which has hit profits and had a knock-on effect across the economy.
The new hard border introduced between Britain and the EU has also had a detrimental effect on business with delays affecting deliveries and therefore profits.
Red tape and new restrictions have been bad news for many British companies which report losing customers and orders and, in the worst case, having to go out of business.
There’s also the rising cost of the UK's Brexit divorce bill from leaving the EU. The latest government estimate last month put it at £42.5bn. That’s cash taken out of the UK economy.
How does increasing interest rates tackle inflation?
Beth Timmins
Finance reporter
Next, another question relating to using interest rates to control inflation, from Kevin Fryers in Hampshire:
If inflation is caused largely by the war in Ukraine and not the economy being overheated, how does putting interest rates up help?
Inflation, which measures how fast the cost of living rises over time, is now set to hit more than 13% in the UK.
This inflation rise has been reflected in major Western economies, as the cost of energy and food has been pushed up by dwindling supplies caused by the Russian-Ukraine conflict.
Such a figure has encouraged the Bank of England to increase interest rates.
The idea is that when borrowing is more expensive, people will have less money to spend. As a result, they will buy fewer things, and prices will stop rising as fast. Increasing interest rates is one way to try and control inflation as it raises borrowing costs.
But in the UK, for example, about 2.2 million homeowners with mortgages linked to the Bank of England's base rate would see repayments go up, putting further pressure on household budgets that are already being squeezed by the cost of living.
Time to fix?
Simon Read
Personal Finance Reporter
Mortgage borrowers are always faced with the perennial question of when is a good time to fix their rate.
The advantage of a fixed rate is that you know how much monthly repayments will be for the length of the fix, which can really help with budgeting.
But the danger is of fixing at too high a rate when you could be saving money every month with a cheaper variable deal.
The average five-year fixed rate mortgage has now breached 4%, according to rates analysts Moneyfacts.co.uk.
Experts expect rates to climb even more after yesterday’s half a percentage point rise in the Bank rate.
Does that mean you should look to get a decent fix rate now?
Yes, reckons Rachel Springall, finance expert at Moneyfacts.co.uk.
"Borrowers who have not locked into a fixed rate would be wise to move quickly to secure a new deal as interest rates continue to climb," she said.
How will a recession hit the UK housing market?
The Bank of England has warned Britain will lurch into recession later this year, but how will that affect the housing market?
It will be the first UK recession since 2020 - at the height of the Covid crisis.
That actually boosted property prices as working from home encouraged both house movers and buyers in a race for space.
The housing market has been rampant ever since as people taking out a mortgage took advantage of low interest rates and a stamp duty holiday, but a recession could finally put the brakes on it.
The latest figures from the Halifax bank published on Friday showed that prices climbed 11.8% in the 12 months to July.
However, they slipped by 0.1% month-on-month in July - and that was before the Bank of England raised interest rates to 1.75% to tackle soaring inflation.
Read more on this story here.
How can higher interest rates help me?
Beth Timmins
BBC News
Tony Hall wants to know in what way people are going to be assisted by yesterday's announcements from the Bank of England.
How does increasing interest rates - affecting mortgages and other loans - help the population cope with a higher cost of living?
The Bank has introduced the biggest interest hike since 1995 to try to tackle inflation.
This adds significant costs to borrowers but is meant to subdue the fast pace of price growth and wage increases.
However, as the energy price increases are largely a supply problem, the Bank has less power to control this factor which is driving up the cost of living.