Inflation stuck at 3 per cent in January rather than seeing the expected fall, adding weight to suggestions interest rates could rise in May.A Reuters poll shows that 32 out of 57 economists tipped Bank Rate to rise in May following the more hawkish tone in last week’s Inflation Report and rate decision commentary.Meanwhile, Gertjan Vlieghe, a member of the monetary policy committee that sets rates, said this week that a pick-up in wages and an increase in household debt meant the economy was ‘ready for somewhat higher interest rates’. The Inflation Report mapped out how markets see interest rates rising faster than previously expected in the UK, US and EuropeThe Bank of England kept Bank Rate at 0.5 per cent in February but said that rates were likely to rise faster than previously expected due to a strong economy and inflation.Its quarterly Inflation Report indicated a next rate rise in autumn or winter this year, but economists commented that a rise of 0.25 per cent could come as early as May, with another one by the end of the year if the economy performs well. Why are interest rates tipped to rise – and when will it happen? Interest… Read full this story
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