Bank of England proposes to raise the benchmark interest
rate by a quarter- point to 5.75 per cent this month in
a bid to raise borrowing costs that may be needed to contain
committee agreed that, should the economy continue to
develop broadly in line with the central expectation,
bank rate could be raised further as necessary,'''' BoE''s
nine-member monetary policy committee said in the minutes
of a meeting published in London.
of England had raised the base rate to 5.5 per cent, a
six-year high, in August last year.
central bank''s view that higher borrowing costs may be
needed to bring inflation back to the 2 per cent target
also cements expectations of further increases in bank
Mervyn King said last week that companies might have more
room to raise prices now, which could lead to faster wage
growth and trigger an inflationary spiral.
implied rate on the September interest-rate futures contract
rose 0.03 percentage points to 6.02 per cent in early
The contract settles to the three-month London interbank
offered rate for the pound, which averaged about 15 basis
points more than the central bank benchmark for the past
pound rose about 0.2 per cent to $1.9756, but was still
lower than the level of $2.0133 reached on April 18.
proposed rate increase would be the fourth since the start
of August. At 5.5 per cent, Britain''s key rate is higher
than the 5.25 per
cent in the US. The European Central Bank kept its benchmark
rate at 3.75 per cent this month. Canada''s main rate is
4.25 per cent and Japan''s is 0.5 per cent.