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CBI: Inflation may cause Bank to hike base rate soon
Posted by Helen Jones
The Bank of England may have little choice but to raise interest rates in the UK sooner rather than later.
That is the opinion of Ian McCafferty, chief economic advisor at the Confederation of British Industry (CBI), who believes the factor of continually-rising inflation will result in policymakers at the institution having to take action on the figure in the near future.
Yesterday (July 7th), it emerged that the Monetary Policy Committee had decided to maintain the figure at its historically low level of 0.5 per cent for the 28th month in succession.
It is still apparently thought by officials that the country's economy is not yet strong enough to cope with an interest rate hike, but Mr McCafferty indicated this trend may not be able to continue for much longer.
"With inflation likely to rise to five per cent by the autumn and the economy still gradually recovering, a shift in policy should not be ruled out before the end of the year," he noted.
08/07/2011 15:35
News category: Consumer