Experts predict Bank of England base rate to hit 5.5% by end of the year
Bank of England ‘raising interest rates again this month’: Experts predict base rate to hit 5.5% by year end
More rate hikes are on the agenda as the Bank of England prepares to jack up the cost of borrowing for the 13th consecutive time.
Experts say the Bank will have to raise its base rate – now 4.5 percent – to 5.5 percent by the end of this year to curb stubbornly high inflation.
The prospect of higher interest rates for longer periods of time has already prompted banks and building societies to raise the cost of fixed-rate mortgages or close deals altogether – as HSBC did last week.
Busy: Economics professor Silvana Tenreyro (pictured) will soon complete her second three-year term on Bank’s rate-setting committee
Higher-than-expected interest rates also threaten tax cuts ahead of the election.
The Office for Budget Responsibility, the independent watchdog, believes the rising cost of servicing the government’s mountain of debt will wipe out Chancellor Jeremy Hunt’s limited room for giveaways.
The Bank’s rate-setting committee — where economics professor Silvana Tenreyro will soon complete her second three-year term as an outside member — will face more pressure to act at its meeting later this month.
Its counterpart in the eurozone is also tightening the monetary screw.
A quarter-point increase this week by the European Central Bank, bringing the deposit rate to 3.5 percent, “seems almost certain,” said Philip Shaw, an economist at Investec bank.