Interest rates unlikely to rise again, business loan users told

Fri, 11 May 2007

Business loan customers may be relieved to learn that a financing organisation has predicted an end to the recent spate of base rate rises.

This week, the Bank of England's monetary policy committee elected to raise interest rates by a quarter of a percentage point to 5.5 per cent, leaving some business loan users facing increased monthly repayments.

The decision came after it was revealed recently that consumer prices index inflation jumped to 3.1 per cent in March 2007 - the first time it had exceeded chancellor Gordon Brown's upper limit of three per cent since the Labour party came to power.

Now, Trevor Williams, chief economist at Lloyds TSB Corporate Markets, has predicted that barring another inflationary hike the base rate will not be raised again.

"Our view is that interest rates have now reached their peak," he said.

"Another rise, however small, would only be justified if inflation continues to drift further beyond target."

As business loan customers may already be aware, interest rates are now at their highest level since the Bank assumed responsibility for setting them in 1997.

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