Bank of England ups interest rates to 5.5%

The Bank of England today announced that interest rates would be raised by 25 basis points, bringing them to a six-year high of 5.5%.

This puts increasing pressure on homeowners, who have had to sit through four quarter-point rises in less than a year.

While the CBI has called for a halt to further rises in the immediate future, there have been repeated calls from some business sectors that the Bank of England has been acting far too slow.

In an editorial last year, entrpreneur magazine, Platinax, criticised the Bank of England for allowing the economy to roll out of control without applying even small pressure to the brakes, pointing out that refusal to apply sensible increases then would result in the need for steeper increases later on.

It now appears that this opinion has been increasingly on target - unlike the Bank of England.

While the interest rate rise today was expected, there remain concerns that further interest rates may yet be required.

While the Bank of England suggested that falling utility bills should help knock as much as a full percentage point from the current inflationary rate of 3.1%, of the thirty-six inflationary yardsticks used to measure inflation on the CPI, twenty-six are still above target.

The warning is clear that further interest rates rates may yet be required, even though the UK has the highest interest rates of all of the G7 nations.

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