9 August 2006
It has been revealed that interest rates could increase again before the end of the year.
The Bank of England has released its inflation report, noting that the monetary policy committee (MPC) moved to increase the base rate in August due to the continued rise of inflation.
Its report suggests that inflation over the coming two years is likely to increase before settling back near the government's target of 2%.
"A number of influences are expected to push up inflation in the latter part of 2006," the report states, adding that a number of factors are likely to see inflation increase over the coming months.
The MPC uses its interest rate-setting powers as a way to regulate the country's inflation and as inflation continues to rise above the 2% mark, a rise in the base rate becomes increasingly likely.
Commenting on the MPC's decision to raise interest rates in August, the bank's report states: "Given that outlook, with inflation likely to remain above the target for some while, the Committee judged that an increase of 0.25 percentage points in the official Bank rate to 4.75% was necessary to bring CPI inflation back to the target in the medium term."
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