Further interest rate rise likely for Spring

A Reuters poll shows that economists expect a further interest rate rise this year, most likely in April or May.

78% of respondents expect rates to rise by a further quarter point by June. The above target inflation rate is likely to be the reason behind any potential interest rate rise.

Ross Walker of RBS said: “We will probably see one more hike. The Bank of England will be minded to err on the side of caution, raising rates once more and take some of that tightening back next year.”

If interest rates are raised, forecasters expect them to fall back to the current level of 5.25% by early 2008.

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