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What next for interest rates?
The Bank of England base rate has remained unchanged at 0.5% for the past 11 months. There is now an increasing debate in the media and financial services industry about what is going to happen to it next.
Most analysts, until last week, seemed to be of the opinion that the rate would remain as it currently is until Autumn 2010, and then would finish the year at 1%, with a likely rise to somewhere between 2%-2.5% in 2011.
But that was before the inflation figures for January were published last week.
The inflation rate jumped to 3.5% in January - the fastest annual increase for 14 months - and it was largely seen to be the result of the VAT rate returning to 17.5% and higher petrol prices. A normal tool used by the Bank of England to control rising inflation is to increase interest rates - but with the UK economy still struggling, that appears to be something that the Bank of England - and certainly the present government - would be reluctant to do.
[ 25-02-2010 ]
