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Confirmed: More interest rate rises coming according to Bank of England insider

Mirror logo Mirror 09/11/2017
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One of the Bank of England's most hawkish interest rate setters has said the most recent hike was inevitable and assured that further rate rises were on the horizon.

Ian McCafferty, an external member of the Bank's Monetary Policy Committee (MPC), said he did not necessarily feel "vindicated" after his colleagues finally agreed to raise rates from record lows of 0.25% to 0.5% on November 2, saying there was always an expectation that they were set to increase rather than take a further cut.

"I don't think it's a matter of vindication. I don't think there have been huge differences in terms of the trajectory for rates on the committee - it's purely a question of how much evidence does one need before one changes one's mind," McCafferty told LBC Radio.

"And talking to other members of the committee all the way through the summer and the autumn, it was more a matter of 'when' interest rates would need to go up rather than 'whether' interest rates would need to go up.

"We finally had enough proof to satisfy seven of the nine members."

That evidence resulted in the first hike in a decade, having been cut to record lows in the wake of the Brexit vote.

Watch: UK rates debate rumbles on (Reuters)

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McCafferty had been among the minority of MPC members pushing for an increase in recent months.

While some experts have suggested the Bank will usher in another interest rate increase by spring 2018, McCafferty stuck to the MPC's more ambiguous view, saying he expects two more rate rises over the Bank's current forecast period, "which is two to three years".

"I'm not sure anybody can say exactly when they're going to be at this stage.

"The economy remains quite uncertain in terms of when we will get resolution to some of the uncertainties around the Brexit negotiations, as well as many other factors that may affect the economy on a two-year horizon."

He reiterated that as long as the economy performs as the Bank expects, those rate rises will help bring inflation - which currently sits at 3% - to its 2% target.

He said Britain's banks should start passing on interest rate increases to benefit savers, encouraging consumers to shop around.

"If their bank is not offering them the increase, then look for another bank that is. And that will then allow - or force - the banks to push through the bank rate rise in terms of savers as well as borrowers."

Tips for borrowers as interest rates rise

* If you are on your lender’s Standard Variable Rate, now is the time to make your move and switch onto a fixed-rate deal. Standard Variable Rates are expensive, often with rates over 4% already.

* Speak to your lender first to find out the best rate they will offer. And speak to a mortgage broker to see if you can find a better rate elsewhere.

* If you are on a good tracker deal that is less than you could get on a fixed-rate loan, you may want to stick with it. But you need to keep a keen eye on the base rate. Make sure you know when to make your move onto a fixed-rate deal. And be aware that as the base rate rises, the fixed-rate deals will move higher too.

* If you are on a fixed-rate deal that ends within six months look for your next deal now. With most lenders you can secure a mortgage six months ahead. Track Standard Variable Rates at landc.co.uk/svrwatch

Tips for savers as interest rates rise

* Know where you stand now. Check the interest rate you are getting and whether your bank is putting your rate up to match the base rate rise. Many savers have cash in accounts paying rates as low as 0.1% – you can do better than that.

* Interest rates won’t suddenly shoot up and some banks may not put rates up at all. But it’s worth keeping an eye out to see who puts rates up as you may find a better place for your cash.

* A few of the big high street names have said they will put up rates, including Nationwide, Yorkshire Building Society, TSB and Skipton Building Society. You may want to hang fire on locking cash away longer term. Let the dust settle.

* Remember there’s another base rate decision in December.

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