Rate rise warning 'unlikely' to be fulfilled

Posted: 24 Aug 2010 11:45:11 GMT

A prediction that Bank of England interest rates will rise to eight per cent to combat an inflation rate of ten per cent has been questioned by an economist, which may reassure those looking to sell their homes.

The forecast by chief economist at thinktank the Policy Exchange Andrew Lilico is dependent on an unlikely boom in lending by banks, senior economic advisor to the Ernst & Young ITEM Club Andrew Goodwin said.

He remarked: "I would not consider it to be inevitable at all, indeed I would be very surprised if that scenario played out."

Those keen to sell their homes may be encouraged by such a suggestion, as lower rates could mean cheaper mortgages and therefore more chance of people being able to afford to buy residences.

In his comments, Mr Lilico also argued a double dip in the economy was likely, arguing that the only recorded recession when this has not happened was in the early 1980s.
 

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