Further rate rise expected

Posted: 06 Jun 2007 11:06:53 GMT

New figures have suggested that most people are anticipating a rise in the Bank of England's interest rate in the next 12 months.

New figures have suggested that most people are anticipating a rise in the Bank of England's interest rate in the next 12 months.

Although interest rates have risen four times since August last year, inflation has continued to grow and as such the vast majority of consumers expect the bank to introduce more rate rises to curb that increase.

House prices have continued to grow at a strong rate over the last ten months despite the interest rate rises, but it seems that most people still expect to see prices increasing again, regardless of new rate rises.

In the latest Consumer Barometer from Lloyds TSB Corporate Markets, 77 per cent of respondents said they anticipated interest rates being higher in 12 months' time than they are today.

However, at the same time, the same proportion of respondents to the poll expected prices to be higher than their present level, meaning that they do not expect the bank's moves to precipitate a crash in the housing market.

Commenting on the findings, Trevor Williams, chief economist at Lloyds TSB Corporate Markets, said: "Last month's interest rate rise did little to convince consumers that rates had reached a peak. In line with the prevailing opinion of the financial markets, consumers believe rates will increase further this year.


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