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Raise rates before poll, Bank warned

News of rate rise

Several former Bank of England policymakers have said interest rates should rise before the general election as the UK economy continues to stabilise and wages begin to recover. The Times polled nine former MPC members on the subject and found that five would raise rates by March 2015 and seven would do so by June. Former BoE deputy governor Sir John Gieve said rates should have risen already and ought to be put up at the time of the February Inflation Report. Dame DeAnne Julius and Charles Goodhart also called for an increase in February, while Kate Barker would vote for an increase in the first quarter of next year. By contrast, Danny Blanchflower said there should be 'no rate rises for a long time'.

A Treasury survey of Britain's leading economists has found that, on average, they expect the Bank of England base rate to double to 1% by the end of next year. However, some organisations including UBS, Credit Suisse and Barclays Capital are predicting that rates could reach 1.5% by year end. While higher rates could provide respite to millions of pensioners who have seen the value of their savings shrink because of inflation and rock-bottom returns, a rate hike will leave many households paying significantly more on mortgage and debt repayments.

Note: News bulletin content has been provided by a third-party and is not the opinion of Santander

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