No rate cuts this year, CBI predicts

The Confederation of British Industry (CBI) has forecast in its latest report on the UK economy that the Bank of England's monetary policy committee (MPC) will not have any scope to lower the base rate this year.

While the body did not forecast any rate rises, it said the MPC would not have any scope to ease the pressure on borrowers as consumer prices index (CPI) inflation is set to go on climbing.

It predicted the CPI rate will spend four months over the three per cent ceiling level of the government's target range, peaking at 3.8 per cent and obliging Bank of England governor Mervyn King to write four open letters to the chancellor explaining how the MPC will deal with the situation.

The inflation rate will not ease enough to allow cuts until next year, the report added.

Such news may disappoint those hoping that the cost of borrowing for a mortgage will come down soon.

Those keen to get on the ladder may consider self build as a potentially cheaper alternative.

Tomorrow will see the publication of the latest CPI figures by the Office for National Statistics.