Inflationary pressures unlikely to raise interest rates

Inflation currently stands at 2.2 per cent, two points above the BoE’s inflation target, prompting many to speculate about an impending interest rate, which would harm those with credit card and loan debts.

However, Jonathan Said of the Centre for Economics and Business Research, said that these inflationary pressures were on the cost side, rather than the demand side, meaning an interest rate rise was not justifiable.

Mr Said added: “I’m not too sure that rates will rise this year. 2007 and 2008 will be benign years for growth and a rate rise could exacerbate that.

“The extent of the consumer resurgence is not strong enough to support a rate rise.”

The BoE’s monetary policy committee’s next decision on interest rates, which will affect consumers nationwide, will be announced on July 6th.


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