Is there any chance that the current higher-than-desirable inflation would lead to interest rate rises? Or is it not going to happen because of the issues with growth?

To put the base rate up would be calamitous for the economy, the inflation figures are due to oil prices predominately and the recent exposure of daily sundries that have hit the headlines. The economy needs to be boosted in the spending department but the reluctance to do so with the credit crunch, which is I believe is actually a smoke screen for lenders to hide behind and has allowed them to price fix mortgages needs to a real good kick start. If rates increase it would be financial suicide for the economy. It seems as if we are willing a recession to fall upon us, the 3% figure is not that bad at all the 2% limit set by the BoE was a figure that was encouraged to eventually start the fall that we have recently experienced, I think that this will continue and the the headline figure is just a temporary blip. My opinion anyone else got more views??

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Regards

Ian

Within the last day or so I heard an authorative source... words to the effect of... because of inflation it is nearly as likely that interest rates will go up rather than stay the same and reductions are not on the cards at the moment.

Rates will have to stay the same. If rates go up it will put us towards a recession and if rates go down inflation will go higher and that's good for nobody. BoE primary responsibility is inflation and anything else is secondary.

It's hard to see the full effect of a rate cut until 3-4 months after it has happened. This suggests that inflation will go even higher and reduces the chance of a cut even further. The only thing that could lead to a rate cut now is if the Government revise there 2% target to reflect current conditions. That won't happen till the next budget, I guess.

I agree with the other posters that due to the conflicting economic pressures we are likely to see no change in rates for the next few months.