Inflation 'puts off further rate cuts'

Rising inflation is likely to put of any further cuts in interest rates, experts have warned.

The Bank of England has cut the base rate twice in the last three months, which has relieved some of the pressure on hard-pressed homeowners.

But with inflation up again this week to 2.2 per cent – slightly above the Treasury's target – interest rates are unlikely to fall any lower for the time being.

"Inflation risks remain high as a result of fuel and utility prices, which means that the monetary policy committee (MPC) will not be able to use bank rate reductions as a relief strategy again for a while now," said Katie Tucker of the mortgage broker Charcol.

This will be bad news for anyone struggling to manage their domestic finances.

Fuel bills, home insurance premiums, mortgage repayments and council tax are all on the way up, putting pressure on people's wallets.

February 14^th 2008

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