Consumers 'expect further interest rate increases'
Published On 5 June 2007
Consumers in the UK expect interest rates to increase again before the end of the year - putting further pressure on people with credit card debt and mortgages, a new report claims.The latest Consumer Barometer from Lloyds TSB indicates that 77 per cent of consumers in the country believe another interest rate rise is likely in the next 12 months.
These negative expectations about the direction of future interest rate moves are already having an impact on consumer confidence, the report claims. It found that people are now less certain about their job security and employment prospects than they were in April.
"Last month's interest rate rise did little to convince consumers that rates had reached a peak," explained Trevor Williams, the chief economist at Lloyds TSB Corporate Markets.
"In line with the prevailing opinion of the financial markets, consumers believe rates will increase further this year.
"We're just beginning to see the impact of May's rate rise on consumers with sentiment on job security and prices starting to cool. Even so, there is still some way to go before the Bank of England will be reassured."
The Bank of England's Monetary Policy Committee is due to meet on Thursday (June 7th) to decide what shall happen to interest rates this month.
