Experts tip Bank to raise rates

Posted: 05 May 2006 17:21:07 GMT

Experts are predicting that the Bank of England will eventually raise the interest rate, despite the current freeze.

With the departure of Stephen Nickell, the only member of the monetary policy committee (MPC) to consistently call for a cut, experts believe the "next move will be up".

A rise would increase loan repayments and drive down house prices but would make saving more attractive.

"There are growing signs that when the MPC does decide to shift rates, the next move will be up," said Trevor Williams, chief economist at Lloyds TSB Financial Markets.

His opinion was shared by Errol Francis, of Credit Suisse Asset Management: "On balance, data released in the past few weeks suggests that there is now a greater likelihood that the Bank of England will raise interest rates later this year."

No change has been made to interest rates since last August's cut, though other major countries such as Canada, Australia, the US and the European Central Bank have all raised theirs this year.

Howard Archer, chief economist at the Global Insight consultancy, has already stated that he believes it could even be as late until "well into" 2007.

However, with Mr Nickell joined by Richard Lambert in leaving the MPC, expectations of whether the Bank will raise rates will be strengthened when their replacements are announced.


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