| UK
Interest Rate: 5.5%
UK
Interest Rates Forecast: Likelihood of further rise
in next 3 months
Inflation
Starts To Fall
The
Bank of England's latest inflation report, published
this week, shows that the government's preferred CPI
measure of inflation has dropped from 3.1% in March
to 2.8% in April.
RPI
inflation, which includes interest on mortgage payments,
also dropped – from 4.8% in March to 4.5% - although
this is still higher than most other Western European
countries.
The
Bank has indicated that its top priorities are goods
price inflation and upwards pressure on wages, both
of which are still a concern. It is expected that as
last year's high energy prices gradually fall out of
the inflation calculations, CPI inflation will continue
to fall, although analysts are divided over whether
this will be sufficient to reduce CPI inflation to its
2% target.
Bank
Governor Confirms Further Rises Likely
In
a statement following the publication of the latest
quarterly inflation report by the Bank of England, Governor
Mervyn King has confirmed that a further increase in
interest rates is likely, commenting
that, "The path of interest rates assumed in this
projection anticipates a further rise in the bank rate."
Lenders
Adjust Their Standard Variable Rates
In
the wake of last week's interest rate rise, most of
the UK's largest mortgage lenders have been quick to
adjust their standard variable lending rates upwards.
Most
lenders have opted for a 0.25% increase, although some
have opted to increase their SVR buy as much as 0.45%.
Unsurprisingly,
banks have been much slower to announce increases to
savings rates, with more than half yet to announce a
decision and some lenders opting not to pass the full
0.25% increase on to all their savers.
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