Rate rise predicted

The Bank of England's monetary policy committee (MPC) could be set to raise interest rates this week, it has been predicted.

Such a move, made in response to rising inflation, could easily be the outcome of the meeting on Thursday, the Daily Record reported.

It noted that this is the view of a number of economists, such as Philip Shaw at Investec, who said: "We cannot entirely rule out the risk that the committee will sanction higher rates this time."

Vicky Redwood of Capital Economics suggested that any change to the base rate in the near future will be "more likely to go up than down".

The current consumer prices index rate of inflation is 3.8 per cent, with many expecting it to rise to as much as five per cent.

In its analysis of the situation, the Times forecast no change, but said the debate between those advocating any of the three possible decisions will be "still more intense" than before.

Any rate rise could dash hopes of mortgage rates falling, which may make self-build a more cost-effective way to obtain a home.