Base rate boost looks likely

Posted: 13 Feb 2008 10:45:30 GMT

Homeowners look set to receive another base rate boost following the release of the consumer price index (CPI) inflation figure for January.

Homeowners look set to receive another base rate boost following the release of the consumer price index (CPI) inflation figure for January.

CPI inflation reached 2.2 per cent in the month, just above the government's two per cent target and slightly up on December's figure of 2.1 per cent.

It is the highest inflation figure since June 2007 but the 0.1 percentage point increase was not as quick as many had feared.

As a result of this, many analysts now believe that the Bank of England will cut the base rate again.

"Inflationary pressures will continue to be a concern in the short run - yesterday's producer price release showed the highest level of factory gate inflation since 1991," said Richard Snook from the Centre for Economics and Business Research.

"The results support a gradualist approach to interest rate cuts as the Bank carefully balances stimulating the economy whilst keeping inflation at, or close to target

"The UK results increase the likelihood of another interest rate cut within the next two months," he continued.

The Bank cut the base rate of interest by 0.25 percentage points in February.

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