Base rate may reach 7.5%

The base rate may rise to as much as 7.5 per cent this year in the face of rising inflation, it has been claimed.

“A group of Britain’s leading monetarists” made the prediction to the Daily Telegraph yesterday.

They were speaking after reports recently revealed that inflation breached three per cent in March, requiring Bank of England governor Mervyn King to write a letter of explanation to the chancellor.

One commentator, Tim Congdon – a former professor at the London Business School – told the newspaper: “Inflation is back and it’s going to get to four per cent by the middle of the next year.”

“Rates will have to go to six per cent Ö and may have to reach 7.5 per cent,” he predicted.

The news will undoubtedly be of interest to borrowers and anybody who is looking to buy a property, particularly first-time buyers, as an increase in interest rates will have a significant impact on mortgage rates and availability.

© Adfero Ltd

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