Analysts predict interest rate rise to 5.5pc

Speaking two days before the MPC is set to make its next announcement, Iggo’s views echoed those of many commentators who believe the cost of borrowing will rise once more from 5.25pc in a bid to keep inflation in line. However, he attempted to dampen any panic that might prevail by forecasting lower inflation and slower economic growth going forward. This, he said, would strengthen the case for lower interest rates once again as 2007 unfolds. Tony Dolphin, Henderson’s director of economics and strategy, agreed the “hawks” at the MPC would be more inclined to vote for further inte...