An interest rate rise from the Bank of England in the near future is being described as a “near certainty” as inflation hits 3 per cent.
This morning the Office of National Statistics said that in the year to September inflation had risen to 3 per cent, the highest annual rate since March 2012.
Sanlam UK investment analyst Matthew Brittain says: “Today’s announcement makes an interest rate rise in November a near certainty as the Monetary Policy Committee takes action show they are keeping inflation under control.”
He adds that the firm expects inflation to fall back towards 2 per cent in the coming months.
But that view is “not necessarily shared by the Bank of England”, adds Brittain.
Tilney managing director Jason Hollands says the “age of record low interest rates is coming to an end”.
Share Centre chief executive Richard Stone says households with a variable rate mortgage or other loan will though see repayments increase modestly.
“This will further squeeze the ability of the consumer to spend or save, at a time when real wages are falling again,” Stone says.
Digital mortgage broker Habito says the inflation news “puts yet more pressure” on the Bank of England to raise interest rates in the coming weeks.
But this also “paints an uncomfortable picture for both current and prospective homeowners when combined with rising costs of living and falling disposable income”, the firm says.
Habito adds: “First-time buyers will find it even harder to save for a deposit as both renting and living costs rise.”
Maybe missing something but aren’t we missing the key reason for raising rates, wage inflation and more to the point, the current causes are not something rate rises will have any effect over