UK interest rates set to rise as inflation remains above 10%
Experts have warned that interest rates might have to rise by more than previously feared because current measures are doing little to reduce high inflation.
The base rate, which is set by the Bank of England, might end up as high as 5 per cent as decision-makers try to keep a lid on runaway price rises, economists said on Wednesday.
The warning comes after Consumer Prices Index inflation hit 10.1 per cent in March, a fall from 10.4 per cent in February, but still much higher than the 9.8 per cent that experts had predicted.
Inflation is a measure of how fast prices are rising for shoppers across the country. The Bank of England is meant to try to keep inflation as close to 2 per cent as possible at all times.
The main tool it has to do this is interest rates. By putting up the base rate, it encourages people to save rather than borrow.
This reduces the amount of demand for products and services, therefore helping to keep prices under control.
Economists said that the base rate, which currently sits at 4.25 per cent, could be increased further by the Bank of England to curb inflation. Read More…
