Interest rate predicted to be on hold but rises in pipeline

The Bank of England is to rule on interest rates this week
The Bank of England is to rule on interest rates this week

The Bank of England is expected to keep interest rates unchanged at 0.5 per cent this  week, but the meeting will be watched amid expectations over another hike in May.

Governor Mark Carney has already warned borrowers that rates will need to rise “somewhat earlier and by a somewhat greater degree” to get inflation back on target after stronger-than-expected growth in the economy.

Experts believe the comments last month paved the way for another quarter point rate rise as soon as May, with one more due by the end of the year, and another in 2019, which would see rates climb to 1.25 per cent.

The Monetary Policy Committee is set to sit tight in Thursday’s decision, but could make the next move alongside the next set of quarterly inflation forecasts in May,say to economists. Investec’s Philip Shaw said that some on the MPC may even call for an immediate 0.25 per cent rise.