6 March 2007
Howard Archer from chief UK economists Global Insight has predicted that the Bank of England will raise the UK's interest rate to 5.5%, but no higher in the following few months.
This is bad news for consumers with credit agreements like secured loans as a higher interest rate would mean higher repayments.
His claims come ahead of this Thursday's meeting of the monetary policy committee to decide this month's base rate which currently sits at 5.25%.
Last month's review saw two of the seven committee members vote against a rise, but Mr Archer claimed that a rate hike on Thursday is a "genuine possibility" that will prove to be a "very close call".
"On balance, we believe that concerns over medium-term inflationary risks will lead the Bank of England to rising. Interest rates one more time to 5.5% in April or May," he said.
The good news for those with loans is that the drop in gas and electricity bills means that it is likely the inflation level will decrease - making an overall decrease in interest rates possible in the long-term.
If you're a homeowner and looking for a secured loan, uSwitch.com can help you find the loan that best suits your circumstances. Even if you've had credit problems, we may still be able to find you a loan through our our impartial loans comparison service.