Interest rate rise 'looms closer'

A quicker-than-expected inflation recovery may see the base interest rate rise earlier than thought.

Minutes from the latest meeting of the Bank of England's Monetary Policy Committee (MPC) suggested that an increase from the historic low of 0.5 per cent may be on the horizon.

The rate has been at 0.5 per cent for six years.

While the MPC's nine members voted unanimously in favour of keeping the rate the same, two members said the decision was "finely balanced".

The minutes from April's MPC meeting show that the Bank of England has forecast that CPI inflation will turn negative in the coming months.

But the strong pound is having an effect on the CPI reading quicker than expected.

According to the meeting minutes, this could see "less downward pressure" on prices and a boost to inflation, when the recent falls in energy and food prices drop out of the annual comparison.

Most experts believe an interest rate rise will not come until 2016.

Copyright Press Association 2015