Bank of England

Mortgage lending increased by £1.8bn in January, the highest amount since February last year, the Bank of England has reported.

Sterling rose against the dollar and the euro after monetary policy committee (MPC) minutes for February showed a more hawkish outlook than expected.

The Chancellor has defended the Bank of England over rising inflation and denied the government is making its job more difficult.

Final salary pension scheme members could see a 4% cut in benefits after the BoE used miscalculated inflation rates for more than a decade, experts say.

WHEN SHOULD INTEREST RATES GO UP?

Sterling fell against the dollar and the euro after the Bank of England downgraded its economic growth forecast for 2011.

A series of quarter-point interest rate hikes will begin in May, according to analysts examining Bank of England governor Mervyn King's latest obligatory letter to the Chancellor.

The UK inflation rate rose to 4% in January, which is double the government's target and up from 3.7% the previous month.

The Bank of England has held interest rates at 0.5% and kept its quantitative easing programme at £200bn.

Banks will reveal salary details of their highest paid staff and lend businesses £190bn this year under Project Merlin, but their top earners will not be hit with a bonus tax, the government said today.