Interest rate may be raised tomorrow

The Bank of England’s monetary policy committee (MPC) is set to convene for its monthly meeting tomorrow.

Commentators are widely predicting an increase in the base rate of interest as the body seeks to curb rising inflation.

Three previous rate rises in the past year – each of 0.25 per cent – have failed to have the desired effect.

As a result, inflation breached a three per cent upper limit in March, requiring Bank of England governor Mervyn King to write a letter of explanation to the Treasury.

Despite almost unanimously predicting that there will be an increase in the interest rate following tomorrow’s meeting, analysts are divided on the amount of the rise.

Investment bank Barings has said that an increase of 0.5 per cent is “not impossible”, while others – such as Leeds Building Society – foresee another addition of 0.25 per cent.

© Adfero Ltd

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