Ed Monk, of investment firm Fidelity, said: “It’s now clear the UK has an inflation problem that is worse and more persistent than in Europe and the US. Price rises here are proving more difficult to neutralise and the Bank of England will almost certainly add at least one more quarter-point hike to borrowing costs. There has to be a question as to whether it feels that will be sufficient. The Government promise to halve inflation, and the OBR forecast of it hitting 2.
And Jonathan Rolande, of the National Association of Property Buyers, added: “There is now a strong chance of a further interest rate rise in May.” Julian Jessop, from the free-market Institute of Economic Affairs, said a rate hike looked “inevitable” but added: “It need not be like this. A more credible central bank would be able to look forward, rather than back, and keep interest rates on hold.
A single quarter-point rise in interest rates, currently at 4.25 per cent, would push up the cost of servicing the average mortgage by nearly £300 a year, according to UK Finance calculations. Inflation is set to fall from next month as the leap in energy prices which happened last April drops out of the rolling 12-month data, but wage growth continues to lag far behind price rises, and food is almost 20 per cent more expensive than it was a year ago.
HugoGye
HugoGye