TIMES ONLINE: The Bank of England must raise interest rates by the end of this year to keep inflation in check, the Organisation for Economic Co-operation and Development warned today.
The Bank of England is struggling to curb inflation which is currently 3.7 per cent — far above the Government’s inflation target of 2 per cent.
The interest rate has been at a historic low of 0.5 per cent since March last year. The OECD said that interest rates should start rising this year, and be at 3.5 per cent by the end of next year to keep inflation in check. This would cause misery for hundreds of thousands of mortgage borrowers who would see their monthly payments soar.
“The authorities face the challenge of preserving credibility, with headline inflation and some measures of inflation expectations exceeding the targeted rate,” the Paris-based group of 30 developed economies said in its twice-yearly report today.
“The gradual drift up of some measures of inflation expectations implies a need to increase interest rates earlier than previously thought and no later than the last quarter of 2010.” Read on and comment >>> Susan Thompson, Rebecca O’Connor | Wednesday, May 26, 2010
