If mortgage borrowers escape the impact of a spike in interest rates it should be due to market forces rather than politics, according to Paul Fisher.

The BoE markets director was responding to questions from MPs on the Treasury Select Committee about the impact of an interest rate rise on household mortgage repayments.

He said: “Making monetary policy is always political with a small p. What it isn’t any more is party political. We shouldn’t be put under pressure to change interest rates for party political reasons. But of course it affects people’s lives.”

The Bank did not look at how individuals were affected by monetary policy, he said, although the Monetary Policy Committee operated under an annual remit from the government.

In answer to MPs’ questions, he said an interest rate spike would imply a sharp fall in interest rates as well:

“It takes about a year for banks to fully pass through their funding rates to businesses and households. That’s one reason why Funding for Lending has taken time to come through.”

A rise in the Bank base rate was likely to be the first signal monetary policy was going to tighten, he added, but the central bank would wait to see what the market reaction was before considering any unwinding of quantitative easing.

Bank staff were absorbing the lessons learned from market volatility following the US Federal Reserve chief’s hints about the ‘tapering’ of quantitative easing, he said.

He said the Bank would change interest rates at a time when it wanted to tighten monetary policy, he added.

“Output growth [is up], unemployment is falling – those are the conditions under which we would want to tighten policy,” he told MPs.

Debt Management Office chief executive Robert Stheeman, who was also giving evidence, said borrowers would ‘absolutely’ be affected by a change in interest rates: “In a rising rate environment the entire economy, including mortgage holders will be affected.”