Inflationary Pressures on Interest Rates

The Office for National Statistics has confirmed  that inflation has risen to 2.9%.

This is higher than most analysts expected, where 2.6% was thought most likely.

A 1% rise in just 1 month is the highest leap since records began. Retail Prices Index also rose to 2.4%.

I previously advised the Bank of England monitors inflation carefully. It’s main weapon to combat inflation and keep it under control, is changing interest rates.

If inflation increases then the Bank of England will increase interest rates and similarly if inflation falls it will reduce interest rates.

If interest rates rise then this means, this means that mortgage borrowers will see an increase in their monthly payments unless they are on a fixed rate deal.

For those with savings you should hopefully see an increase in the interest rate you receive on the account.

In light of this data I would suggest interest rates are likely to rise in the near future, if inflation continues to climb.

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