June 7, 2006
Interest rate rise increasingly likely
Written by Brian Turner
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The Bank of England is increasingly likely to raise interest rates later this year.
The suggestion comes after a string of economic indicators showed that UK manufacturing and consumer spending continued to be healthy, while inflation continues to strengthen.
Yesterday the Engineering Employers Federation (EEF) announced that UK manufacturing was enjoying a 10 year high in production.
Meanwhile, the British Retail Consortium (BRC) announced that World Cup fever had boosted spending in May.
While both the EEF and BRC tried to indicate that interest rate rises were not invited, they show that the UK economy so far could probably absorb the effects of any coming interest rate rises.
This is all the more a concern after accountants BDO Stoy Hayward warned that inflationary pressures are growing, with consumer prices rising 0.6% in April - their largest rise in 5 years.
Predictions are that at the current progress, an interest rate rise to 5% by the Bank of England would not be an unreasonable outcome later in the year.
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