UK Interest Rates

Posted by Nogger - a legend in his own mind at 11:23 | Categorized as

10/02/11 -- There seems to be a growing conviction that UK interest rates might be set to start to move higher in an effort to rein in inflation.

The CBI said in yesterday's Guardian that they expect rates to start to rise "in the next few months" whilst the Telegraph reports today that two former members of the MPC said that they would have been inclined to vote in favour of an increase at this week's meeting on monetary policy.

With inflation having risen to 3.7% and showing no signs of slowing many pundits are starting to fancy modest interest rate rises this year and next. As the CBI point out 1.25% by the end of 2011 and 2.75% by the end of 2012 would still leave interest rates here at historically low levels.

An announcement on rates is expected from the MPC at 12.00 GMT today. Whilst they probably will remain unchanged at 0.5% the smart money is starting to fancy an increase maybe as soon as next month and certainly by June.

Footnote: Rates subsequently left unchanged at 0.5% today.