Further rate rise 'looks likely'

Market observers are widely predicting a further rise in the rate of interest after the publication of the minutes of the July meeting of the Bank of England’s Monetary Policy Committee (MPC) revealed that they decided on the most recent rise by six votes to three.

Among those members who voted in favour of putting interest rates up by a quarter of a point to 5.75 per cent were the Governor of the Bank of England, Mervyn King, in addition to a couple of "swing voters" who switched sides from the previous month’s committee meeting.

With news that "core inflation", which excludes energy, alcohol, tobacco and food, recently reached its highest level for ten years and reports showing that the headline rate of inflation is not falling as quickly as the Bank had forecast, many experts have expressed their beliefs that interest rates will be put up again before the end of summer.

"CPI figures suggested core inflation pressures continue to build while energy and food prices remain under upward pressure from wholesale market developments and adverse weather," said James Knightley of ING Bank.

"We therefore look for a further rate move in September, taking rates to six per cent."