Rate rise cannot be ruled out, says economist

It is not impossible that the Bank of England's monetary policy committee (MPC) could raise the base rate today, it has been stated.

Howard Archer of Global Insight has agreed with other economists that the most likely outcome will be an announcement at noon that the base rate is remaining at five per ecnt.

However, he stated: "It is not inconceivable that interest rates could be either raised or, less likely, cut."

Such a move could make mortgages more expensive, which could mean that some will choose to renovate their existing homes rather than looking to take on a costly home loan to move up the ladder.

Last month Tim Besley broke ranks with the rest of the MPC to vote for an increase in the rate.

In a recent interview with the Daily Telegraph, Mr Besley agreed that the rate is "restrictive", but added: "Given the prospects for inflation, a mildly restrictive rate is justifiable."