<\/p>\n
Rising fuel prices are contributing to inflation<\/p>\n
The Bank of England is expected to raise the cost of borrowing this week as policymakers seek to keep inflation under control. <\/p>\n
Analysts have pencilled in a 0.25 percentage points increase in the interest rate to 4% when the bank\u2019s monetary policy committee (MPC) meets on Thursday.<\/p>\n
Even though the base rate has held firm at 3.75% since the start of the year lenders have been making their own moves and mortgage rates have shot back up to three-year highs as markets price in higher energy costs.<\/p>\n
Inflation has been above the Bank\u2019s 2% target for the whole of 2026 and the Office for Budget Responsibility is forecasting it to peak close to 4% early next year \u2013 almost double the bank\u2019s target.<\/p>\n
With three members of the nine strong MPC already pushing for a hike at the last meeting, and the UK economy continuing to show resilience, the case for an interest rate rise is strengthening.<\/p>\n
It would mark the first move in the base rate this year and could be followed by further hikes next year taking the rate to 5% by next winter.<\/p>\n
Danni Hewson, AJ Bell head of financial analysis, comments: \u201cIt\u2019s hard to believe that at the start of the year households were anticipating an entirely different economic picture to the one they\u2019ve ended up with. <\/p>\n
\u201cMarkets had been pricing in at least two cuts to the base rate in 2026, with inflation expected to reach the Bank of England\u2019s 2% target by mid-spring.<\/p>\n
\u201cThe OBR\u2019s latest forecast made for grim reading and even the smorgasbord of small giveaways from the chancellor at this year\u2019s Budget won\u2019t touch the sides, as the rising price at the pump and cost to power our homes ratchets up.<\/p>\n
\u201cWhat many had hoped would be a short-lived conflict between the US, Israel and Iran has escalated. With no clear path to peace in sight, central bankers are once again having to face the spectre of rising inflation.<\/p>\n
\u201cOther central banks have already hiked rates, but the majority of MPC members have clung purposefully to the fence. The fragile labour market has created both worry about the health of the economy and hope that weakness may help limit second round effects.\u201d<\/p>\n
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\t #Case #rate #rise #growing #inflation #takes #hold #Daily #Business<\/p>\n","protected":false},"excerpt":{"rendered":"
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