10 May 2007
Having been predicted for the last few months, today is the day when the Bank of England's monetary policy committee (MPC) is believed to finally raise the base interest rate to 5.5%.
While this is good news for savers, the majority of the British public with debts and loans which are dependent on the interest rate will notice a further financial pinch on top of the three previous rate rises since August 2006.
The reason the MPC is expected to raise interest rates is because the rate of inflation is still above the golden 2% rule, self-imposed by the government. Some analysts have even suggested that a quarter point rise will not be enough and that only a half point rise - taking the rate to 5.75% - would be enough to lower inflation.
There are signs however, that the rate of inflation could be due for a fall, including the fact that energy prices are starting to drop and the cooling off of the housing market.
Governor of the Bank of England Mervyn King said recently that he expected a "sharp decline" in the next four to six months, though he could not dismiss the possibility of a further rate rise this month and possibly one more in the summer months.
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