Those whose debt levels are linked to the Bank of England base rate could find the relief they have enjoyed from this being at a record low for two ye…
Those whose debt levels are linked to the Bank of England base rate could find the relief they have enjoyed from this being at a record low for two years soon ends.
Last week saw the Monetary Policy Committee (MPC) holding the figure again, ensuring it will be two years since the last change come the next meeting, but a survey has suggested the odds on the level staying this way much longer are shortening.
Bloomberg polled 30 economists about the rate of Consumer Prices Index inflation and the median forecast it received for the January figure was four per cent.
If this prediction turns out correct, it will not just represent a further rise on the 3.7 per cent figures seen in January, but also mean the rate is double the two per cent target level.
As a result, the pressure may grow further on the MPC to act and if it does so soon, the consequence could be more people facing repossession as mortgages rise, while any response by lenders to raise other costs could hit those with different issues, such as credit card debt.
Seeking advice on how to become debt free may be important for people who face such potential pressures, as those who can ease their financial burdens will be in a better position to face up to higher interest rates whenever they do occur.
Commenting recently on the prospect of an inflation surge causing a rate hike, MPC member Charles Bean said this is a real possibility, with the consequences being “not nice”.
By Joe White