| UK
Interest Rate: 5.75%
UK
Interest Rates Forecast: Increase to 6% likely later
this year
New
Survey Suggests More Rises To Come
A
new survey of leading economists for the Independent
on Sunday newspaper has found that economists at many
of the City's leading institutions - such as Barclays,
Ernst & Young and HBOS - believe that more rate
rises are on the way.
Opinion
was split as to how much further the Bank of England
will raise rates - with a majority leaning towards a
peak level of 6%, but a significant number believing
that rates could go higher.
Ernst
& Young's own Item Club report has forecast that
the MPC will raise interest rates to
6% in August, at which level they are likely to remain
for a significant length of time - probably around a
year.
The
Chief Economic Adviser to the Item Club, Peter Spencer,
warned that consumers will "simply have to learn"
to reduce their debt-funded expenditure in response
to higher prices and mortgage payments.
Inflationary
Pressures Continue To Grow
New
figures from the Office of National Statistics (ONS)
have revealed that the economy is continuing to grow
robustly - for the 60th consecutive quarter. While this
is undoubtedly good news, less positive is the fact
that this will be the 6th quarter in which economic
growth has exceeded its long-term average.
Many
economists believe this could cause members of the Bank
of England's Monetary Policy Committee to act to prevent
further inflationary growth - possibly bringing forwards
the next rise in interest rates, as
has recently been forecast by Ernst & Young's Item
Club.
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