Interest rates ‘up again by August’

Howard Archer, chief UK and European economist at Global Insight, predicts that by August British credit consumers will face further pressure on their financial circumstance by way of an increase in the cost of borrowing.

The rise would represent the fifth since August of last year and Mr Archer revealed that he was convinced of his opinion in light of the most recent data on consumer price inflation.

He explained: “The Bank of England’s Quarterly Inflation Report strongly reinforces our belief that interest rates are still likely to rise by a further 25 basis points to reach 5.75% by August, even though consumer price inflation retreated to 2.8 per cent in April from a peak of 3.1 per cent in March.”

The Bank of England’s monetary policy committee opted to raise by a quarter-point the cost of borrowing around the country early this month and in January of this year.