Interest rates hit 5%
Published On 9 November 2006
The Bank of England's monetary policy committee has voted to increase interest rates by a quarter point up to five per cent.Rising inflation and continued growth in Britain's economy drove the Bank's decision to up the rate of borrowing.
An official MPC statement read: "It is likely that inflation will rise further above the target in the near term, but then fall back as energy and import price inflation abate.
"Against that background, the committee judged that an increase in bank rate of 0.25 percentage points to five per cent was necessary to bring CPI inflation back to the target in the medium term."
Given that inflation continues to stand above the Treasury's target of two per cent, the rate rise was widely predicted by analysts.
Some market commentators believe the interest rate increase could also have a beneficial impact on the housing market.
Milan Khatri, chief economist at the Royal Institution of Chartered Surveyors, said: "Today's interest rate rise, together with possibly one more in early 2007, should help to produce a "soft-landing" for the housing market, giving rise to a more stable market environment for buyers."
