Bank Base Rates

What is happening to interest rates?

With the current BOE base rate now sitting at 5.75%, have we reached the peak of the latest cycle?

Although inflation seems to have become more subdued, it still looks likely, when considering the Bank of England's minutes from their latest meeting, that interest rates would be increased to 6% in the not too distant future. This would take interest rates to the highest they have been since January 2001! It might also be prudent to allow for a further rate rise, taking interest rates to 6.25%, the highest since December 1998!

Unfortunately, the inflation figures have been largely caused by the rise in the cost of gas / electricity / fuel etc... With the monthly cost of most people's mortgages increasing, together with the increased fuel costs and below than inflation wage increases, many are finding that they have less and less available to spend each month.

Furthermore, many people will be coming to the end of fixed rate deals that were arranged when interest rates were at their lowest point and will be in for a shock with their payments possibly doubling overnight.

These combined factors will certainly not help our economy in general, with the small retailers and business's suffering with reduced sales and profit margins.

Are the Bank of England trying to use interest rates to control house price inflation - if so, I think that they should go back to studying basic economics! Supply and demand. We are in a situation where we live on an island with not enough housing stock for too many people.

This again is not helped by our current immigration rules, allowing more and more people to reside in the UK!