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Bank predicted to raise UK rates Bank expected to raise UK rates
(about 6 hours later)
The Bank of England is expected to raise UK interest rates from 5.5% to 5.75% later, as it resumes efforts to reduce inflation.The Bank of England is expected to raise UK interest rates from 5.5% to 5.75% later, as it resumes efforts to reduce inflation.
Most economists predict the rise after Bank governor Mervyn King said recently that inflation remained a concern.Most economists predict the rise after Bank governor Mervyn King said recently that inflation remained a concern.
They also point to the fact that while rates were kept level in June, four of the nine members of the Bank's Monetary Policy Committee voted for a rise.They also point to the fact that while rates were kept level in June, four of the nine members of the Bank's Monetary Policy Committee voted for a rise.
However, a minority of analysts do feel rates may remain on hold for July.However, a minority of analysts do feel rates may remain on hold for July.
These economists highlight the fact that while the most recent figures showed that inflation remained above the government's 2% target, it did actually slow to 2.5% in May from 2.8% in April.These economists highlight the fact that while the most recent figures showed that inflation remained above the government's 2% target, it did actually slow to 2.5% in May from 2.8% in April.
Mixed housing signalsMixed housing signals
There is also some dispute over the ongoing strength of the housing market. There is also some dispute about the ongoing strength of the housing market.
While the Halifax revealed on Wednesday that UK house prices rose 0.4% in June, Land Registry figures showed that the price of flats, as opposed to houses, in most parts of the England and Wales were now falling slightly.While the Halifax revealed on Wednesday that UK house prices rose 0.4% in June, Land Registry figures showed that the price of flats, as opposed to houses, in most parts of the England and Wales were now falling slightly.
Philip Shaw, chief economist at Investec, said that an increase to 5.75% at this month's meeting was definitely the most likely outcome.Philip Shaw, chief economist at Investec, said that an increase to 5.75% at this month's meeting was definitely the most likely outcome.
"We have long argued that the committee would be unlikely to wait until the next Inflation Report in August to tighten again," he said."We have long argued that the committee would be unlikely to wait until the next Inflation Report in August to tighten again," he said.
"Does this view look correct? We very much think that it does.""Does this view look correct? We very much think that it does."
However, Howard Archer, chief UK economist at Global Insight, said it remained "far from certain" that rates would go up in July.However, Howard Archer, chief UK economist at Global Insight, said it remained "far from certain" that rates would go up in July.
The Bank of England will announce the latest monthly rate decision of its Monetary Policy Committee at noon.The Bank of England will announce the latest monthly rate decision of its Monetary Policy Committee at noon.
Rates have so far risen four times since last August.Rates have so far risen four times since last August.