Insurance News Archive

Bank of England urged to up rates over inflation fears

With inflation riding high at 2.5 per cent and not seeming to be coming down, the Bank of England is being urged to increase interest rates.

The National Institute for Economic and Social Research (Niesr) predicts that inflation will stay above the target of two per cent set by the Treasury until 2008, although at lower than current levels.

The thinktank also claims an increase in the cost of borrowing will not hit the economy and the property market as much as some analysts fear.

It claims that many people are already preparing themselves for a rate rise and that the economy and employment levels are healthy enough to cope with a rate rise.

Niesr director Martin Weale said: "There's little to be gained by delaying the rise until late in the year.

"Given that we have inflation staying above target and given rates are expected to rise I cannot see a strong case for waiting."

The Bank of England will make a decision on interest rates next week.

28 Jul 2006