Interest rates to be hiked above 3.5% next year, economists warn

The Bank of England is expected to push interest rates even higher next week, putting further pressure on mortgages.

Andrew Bailey sought to cool market expectations for how high-interest rates will ultimately increase at the previous meeting, amid improvements in the value of the pound and government borrowing rates since September.

ING’s James Smith, Antoine Bouvet, and Chris Turner said in a note to investors: ‘When the Bank of England hiked by 75 basis points for the first time back in November, it seemed obvious that it would be a one-off move. They predicted that interest rate hikes could stop in February but suggested that continued wage pressures in the labour market mean the Bank could be ‘less swift to cut rates than the US Federal Reserve’.

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