The Bank of England has given its clearest signal yet that interest rates will rise by the end of the year.
Michael Saunders, an external member of the bank’s rate-setting monetary policy committee, said in an interview at the weekend that a rise in interest rates could come “significantly earlier” than previously anticipated.
He added: “Markets have priced in over the last few months an earlier rise in bank rate than previously and I think that is appropriate.”
Markets are now pricing in roughly a one in four chance of a 0.25 percentage point interest rate rise at next month’s bank meeting. The base rate currently stands at a record low of 0.1%.
By the end of next year rates are expected to rise to 0.75%, their highest level since March last year.
