Interest Rates: 'Don't run ahead of yourself', King

The Bank of England lowers its growth forecast and signals a rise in interest rates to tame inflation - but Faisal Islam says the Monetary Policy Committee cannot agree on the way forward.

Link to the article: Channel 4 News

In its latest quarterly report published today, the Bank said output was likely to be weaker than expected in 2011, but a double dip recession was not expected.



Inflation is likely to continue rising this year to around 5 per cent, before falling close to the Government's 2 per cent target in 2012 - but only if interest rates rise in the second quarter of 2011.

Higher mortgages

That would mean higher mortgage costs for those who are not on fixed-rate deals and more expensive borrowing for business. Yesterday, official figures showed that the Government's preferred measure of inflation - the Consumer Prices Index - had risen to 4 per cent.