Insurance News Archive
Base rate increase hint from BoE
After the recent quarter point rise in interest rates to 5.5 per cent property investors may have been hoping for stability, but a Bank of England report suggests more increases are on the cards.
In the quarterly inflation report, the governor of the Bank of England (BoE), Mervyn King, confirmed that a further quarter point rise is likely before the end of the year to reduce inflation.
"The path of interest rates assumed in this projection anticipates a further rise in the bank rate," he said in the report.
This follows a forecast by Market Oracle which predicted that interest rates would hit 5.75 per cent by September.
Commenting on the BoE report, Alan Clarke at BNP Paribas, told FT.com: "The projections validate ours and the market's assumption of a further hike to 5.75 per cent and highlights the risk of 6 per cent."
The Bank is tasked to meet a Consumer Princes Index target of two per cent in two years' time, but in April the inflation marker was running at 2.8 per cent.
However, the economy as a whole continues its sold growth of around 0.7 per cent per quarter, having been boosted by investment from business and the housing spending remaining steady.
22 May 2007
