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PPI: Interest rates could soar to 8 per cent, borrowers warned

Consumers with credit card debts or mortgages could be hit hard by an anticipated rise in the base rate of interest over the next couple of years.

While the Bank of England's monetary policy committee (MPC) has opted to keep the interest rate at the historically-low figure of just 0.5 per cent over recent months, analysts are predicting that this is about to change as it moves to combat surging inflation.

According to leading economist Andrew Lilico from the Policy Exchange, the Bank could put the base rate of interest up to as much as eight per cent by 2012.

Speaking to Bloomberg, he explained that such a drastic move will be necessary n order to offset the risk of inflation caused by the rapid economic growth likely to take place as Britain emerges out of recession.

Should such a prediction come true, it could spell worrying news for borrowers already struggling with unfavourable rates of interest as well as with bank charges or other penalties.

Meanwhile, the Bank of England's latest policy maker Martin Weale has told the Times that the UK is currently facing a "real risk" of falling into a second recession.

Posted by Jennifer Haines

Jennifer's speciality knowledge is credit card changes and balance transfers  ADNFCR-2776-ID-800038441-ADNFCR

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