Inflation expectations on the up

A new poll has shown an increase in the expected rate of consumer prices index inflation (CPI) in 2008.

The median forecast for the level CPI will reach this year is 3.3 per cent, the Bank of England survey has revealed.

Such a figure was up from three per cent in November and represents the highest forecast figure since the survey was first carried out in 1999.

Some analysts have predicted that the news will reduce the chances of the Bank of England monetary policy committee (MPC) cutting interest rates again soon.

One such analyst, Paul Dales of Capital Economics, said: "This will clearly spook the MPC, increasing the chances that interest rates will remain on hold in April and perhaps even May too."

Such news may mean less chance of cheaper mortgages, making self build a substantially cheaper option.

The minutes of the latest MPC meeting, when it decided to hold rates earlier this month, will be published next week.


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