Bank of England urged to raise interest rates
Sep 13, 2006
The Bank of England should raise interest rates in the near future, an economic think tank has advised.
The National Institute of Economic and Social Research (NIESR) expects inflation to remain above the government's targets for the foreseeable future and has called for a rates rise sooner rather than later.
"There's little to be gained by delaying the rise until late in the year", said Martin Weales, director of NIESR.
"Given that we have inflation staying above target and given rates are expected to rise I cannot see a strong case for waiting."
The Bank of England's Monetary Policy Committee (MPC) is due to meet this week to set interest rates, having held them at 4.5 per cent for the past 11 months.
Many experts are expecting rates to rise in coming months, with NIESR predicting that rates will rise by 0.25 per cent before the end of the year.
However, there are concerns about the effects a rise in interest rates could have on debt repayments, particularly in the cases of those with large loans or vulnerable groups such as the elderly.
A recent study from Prudential found that more than one million pensioners are facing debts averaging £15,500.
"Interest rates have been pretty stable for a number of years, but if these start to rise sharply over the next couple of years, debt repayments may not be sustainable for pensioners", said director of Prudential UK, Angus Maciver.
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