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Interest rates 'to rise again'

19 March 2004
A member of the interest-rate-setting Monetary Policy Committee (MPC) has claimed that rates will need to rise to control consumer debt and spending.

Paul Tucker of the MPC claimed that "upside risks" would face the economy if the Bank of England did not respond to signs that inflation is rising, according to Bloomberg.

Mr Tucker announced at the National Association of Pension Funds conference: "I for one would expect us to continue gradually to reduce the degree of stimulus. It could be argued that policy may need to be tighter than would otherwise be the case in order to arrest somewhat the continuing strength of the household sector."

The Bank has been surprised by a number of factors including house prices and consumer debt amounts increasing at a faster rate than expected.

At present, Britain is experiencing some of its lowest interest rates for half a century, the last rise in February seeing rates increased to 4 per cent. Mr Tucker's comments are likely to set off further claims that a rate rise will occur within the next few months.