Lloyds TSB comments in advance of base rate decision

Commenting in advance of tomorrow's base rate decision by the Bank of England Monetary Policy Committee (MPC), Trevor Williams, chief economist, Lloyds TSB Corporate Markets said:

"Unfortunately, we may not have seen the last of the interest rate increases and tomorrow could spring a surprise for those that thought that rates had peaked. Although the last increase may only have been a month ago, all the economic signs are that another one could be on the cards, if not this month then soon.

"Over the past few months, the heat has really been turned up on inflation. Pay settlements have hit a five year high, economic growth is above trend and retail price inflation has edged further ahead of its official target, so the MPC will want to do everything in its power to avoid even greater inflationary ills later in the year. An early rate rise would be the best medicine to help head off further increases later on."