Bank Rate Could Rise Higher
The minutes of the meeting which decided on the 0.25% rise in the Bank Interest Rate earlier this month have been released and it shows that there was unanimous agreement that the rate should rise to 5.5%. However, it also makes clear that there were several on the committee who would have preferred to see an increase of 0.5%.
It may well be that those who opposed the larger increase were concerned it might have looked like a panic measure in response to the inflation rate rising to 3.1% in March. Inflation did in fact fall to 2.8% in April but the rate setting committee has a duty to maintain an inflation rate below 2%.
It does make the possibility of a further rise either in June or July seem more likely assuming that inflation doesn’t suddenly drop.
Figures from the British Banking Association and the Council of Mortgage Lenders released last week seem to suggest that demand for mortgages is easing so the Bank Rate setting committee might choose to wait until July to see what impact the recent rise has had.
Many mortgagees and those with significant debts on credit cards and loans will, no doubt, be hoping that a further rate rise is not considered necessary.
Some analysts, however, remain convinced that the rate might rise to 6% before inflation and borrowing are under control.
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