Interest rate direction remains "uncertain" warns Bank of England

Posted: 15 Feb 2007 09:46:58 GMT

"Considerable uncertainty" remains over the direction of interest rates in the short to medium term, the Bank of England has warned

"Considerable uncertainty" remains over the direction of interest rates in the short to medium term, the Bank of England has warned.

January figures showed that the underlying rate of inflation has fallen back to 2.7 per cent after hitting a peak of three per cent in December.

The bank said that it expected it would take several years for the rate of inflation to return below its targeted two per cent maximum.

This suggests that even leaving aside the chance of further rate rises in the coming months it remains likely that rates will remain near their current level for some time.

Futures traders are currently betting on two more long-term quarter-point rises from the current 5.25 per cent before it begins to fall again.

Notes from the Bank of England's monetary policy committee's most recent meeting will be released on February 21st.

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