THE Bank of England is expected to hike interest rates for the fifth time in a row this week but experts warn that any hesitation could push the price of petrol higher for squeezed drivers.
The Bank is widely predicted to increase its base rate from 1%, already the highest in 13 years, to 1.25%. It would be the first time since January 2009 that the rate has been higher than 1%.
The nine-person Monetary Policy Committee (MPC), which sets the rate, will announce its decision on Thursday. They will want to rein in inflation, which has hit highs not seen for decades.
“The Bank of England faces a stern test at the next interest rate decision, and any hesitation is likely to result in the pound being punished on the markets,” said Laith Khalaf, head of investment analysis at AJ Bell.
An interest rate raise will eat away at some of the Chancellor’s recent handout to support struggling households, because the cost of borrowing will go up for homeowners.
But drivers would suffer if rates are maintained and savers will benefit from a hike.
This month the average price of filling a family car topped £100 for the first time.
The MPC has voted for a rise in each of its last four meetings. According to an Ipsos survey – commissioned by the Bank of England – in early May, 70% of people expect rates to rise over the next 12 months.
