09-08-2007
Interest rates to rise further
Reports are suggesting that interest rates are expected to increase to six per cent before the end of the year.
According to banks, a rise in interest rates to six per cent before the end of the year is considered likely following the Bank of England's confirmation yesterday that it expects consumer spending to significantly slow.
Published yesterday, the Bank of England quarterly inflation report has predicted that inflation will slip back to its targeted rate of two per cent providing interest rates are increased.
"A further rate rise is virtually a done deal," said Simon Hayes, a representative from Barclays Capital.
"We do expect to see a slowing in consumer spending in the next year, but nothing terribly dramatic," added Mervyn King, the governor of the Bank of England.
In related news, Matthew Lynn has suggested the UK could be facing a sub-prime mortgage crisis more severe than America's.
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