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UK
Interest Rate: 5.25%
UK
Interest Rates Forecast: Further rise likely before
June '07
Interest
Rates Could Reach Six Per Cent
There
is a "pretty good chance" that the Bank of
England will raise the base rate again next month, according
to Roger Bootle, respected economist and economic advisor
to accountancy firm Deloitte.
Such
a rise would leave the base rate at
5.5 per cent, raising the cost of borrowing and of mortgage
payments for Britain's homeowners.
Bootle
said that he would expect a delay before rates rose
beyond 5.5. per cent, but would not rule out further
increases. "If economic data, including inflation
data, continues to come in strong, I think rates will
go up again, and indeed I don't rule out rates finishing
up at six per cent", he commented.
Inflation
at Highest Level for 11 Years
Inflation
reached an eleven-year high of 3 per cent in December,
according to new official figures, with the Retail Price
Index measure of inflation, which includes mortgage
interest payments, reaching 4.4 per cent.
Huge
rises in oil and other energy prices are thought to
be behind the rise in inflation, and despite wholesale
oil and gas prices having dropped, these reductions
have yet to be passed onto consumers, preventing inflation
from subsiding.
These
figures are likely to contribute to wage inflation over
the coming months, and seem likely to lead to at least
one further increase in interest rates.
James
Knightley, an economist at the ING Bank, commented that,
"…there remains the real risk that the Bank
of England will hike interest rates again". Knightley
said that he would expect such a rise to take place
in the next two months, a sentiment echoed by other
leading analysts.
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