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What is happening with interest rates for 2017?


Prospective rate rises have been pushed into the distance by overwhelming uncertainty following the result of the EU referendum and the latest move by the Bank of England to cut the base rate.


In mid-October Mark Carney, governor of the Bank of England said formally that he was prepared to tolerate inflation exceeding the Bank’s target of 2 per cent, above which under normal circumstances a base rate rise might be anticipated.


In August inflation was 1.6 per cent, leaving comfortable room for rising prices before the question of raising the base rate arises.


But, as Marmite-gate highlighted, pressure on the pound is already feeding through into the cost of goods and experts have warned inflation is likely to rise over the coming months.

Given the risk to people’s job security however, the Bank is highly unlikely to reverse its August decision to cut the base rate to 0.25 per cent any time soon as a result.


Article by Simon Lambert & Sarah Davidson for ThisIsMoney.co.uk

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