UK Daily Mail
Aug 23, 2010
Interest rates could increase 16-fold within two years to 8 per cent – adding £900 to the average monthly home loan bill, it was claimed last night.
An economist at an influential think tank has warned that the base rate may spiral ‘rapidly’ as the Bank of England will need to curb runaway inflation.
Andrew Lilico, of the Policy Exchange think tank, said: ‘To keep inflation (as measured by the retail prices index) down to only 10 per cent for one year, the economy will have to be able to tolerate interest rates of perhaps 8 per cent.’
His warning echoes that of former Bank of England deputy governor Sir John Gieve, who last month said he expects rates to start rising ‘faster than the market currently expects’.
This article was posted: Monday, August 23, 2010 at 3:39 am