Record number predict interest rate rises

A record number of people expect interest rates to rise over the next year, the Lloyds TSB Consumer Barometer has revealed.

Seventy per cent of respondents said that they expect interest rates to increase before July 2007, the highest polled by Lloyds TSB since it launched the survey in 2004.

This compares to just five per cent who said that they expected interest rates to fall. Last week, the Bank of England (BoE) voted to leave rates unchanged for another month.

Despite their expectations on rates, the number of people predicting increasing inflation fell from 75 per cent in May to 69 per cent in the most recent poll.

“It is interesting to see that more consumers expect rates to rise despite their belief that prices pressures are falling,” said Trevor Williams, Lloyds TSB’s chief economist.

“Financial markets expect a rise of up to 0.5 per cent this year and next month’s BoE inflation report could easily provide the justification for a 0.25 per cent hike.”

Low interest rates have kept the economy ticking over during the past year, with competitive best rates of credit sustaining the affordability of debt.

© Adfero Ltd

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