18 October 2006
The underlying cost of borrowing is set to rise, analysts widely predict.
Minutes released from the Bank of England's last monetary policy committee (MPC) meeting reveal that members were divided over the decision to hold interest rates, making a further rise more likely.
The MPC's two newest members, Timothy Besley and Andrew Sentance, both voted for a 25 basic point interest rate hike this October, meaning the decision to keep rates at 4.75% was only passed by a majority of seven to two.
Moreover, most of the remaining seven agreed with the arguments for a further rate hike but were reluctant to add to market expectations of further hikes.
Upon release of the minutes, James Knightley, economist at ING, told Reuters: "A November hike is a done deal."
Most economists now agree that the MPC is extremely likely to increase interest rates to 5% this November.
"A 25 basic point interest rate hike in November now looks highly probable," Global Insight economist Howard Archer told the BBC.
"There are clearly serious concerns within the MPC that businesses are increasingly looking to raise their prices and that wages could move significantly higher in the 2007 pay rounds."
Compare credit cards and personal loans and start saving money. It takes just a couple of minutes with uSwitch.
© 2008 Adfero Ltd
Content for the uSwitch.com market news service is provided by a third party, Adfero Ltd. Whilst uSwitch.com makes reasonable efforts to check the reliability of this content, uSwitch.com does not guarantee the accuracy thereof or endorse the views or opinions given by Adfero Ltd, unless expressly stated otherwise.