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| Version 1 | Version 2 |
|---|---|
| UK rates expected to rise to 5% | UK rates expected to rise to 5% |
| (about 4 hours later) | |
| UK interest rates are expected to rise to a five-year high of 5% after the Bank of England's lunchtime meeting. | UK interest rates are expected to rise to a five-year high of 5% after the Bank of England's lunchtime meeting. |
| The predicted raise from 4.75% would be seen as a bid to cool inflation. | |
| UK inflation is currently running at 2.4% - above government targets of 2% - and bigger utility bills and university fees are expected to keep it high. | UK inflation is currently running at 2.4% - above government targets of 2% - and bigger utility bills and university fees are expected to keep it high. |
| A rise in rates is bad news for homeowners and borrowers trying to pay off mortgages, credit cards and loans as it increases their repayments. | A rise in rates is bad news for homeowners and borrowers trying to pay off mortgages, credit cards and loans as it increases their repayments. |
| The Bank is due to announce its rate decision at 1200 GMT. | The Bank is due to announce its rate decision at 1200 GMT. |
| Last week, government figures showed a record number of people in England and Wales became insolvent between July and September because of rising personal debt levels. | Last week, government figures showed a record number of people in England and Wales became insolvent between July and September because of rising personal debt levels. |
| The Insolvency Service said 27,644 people went bankrupt or entered into Individual Voluntary Arrangements (IVAs) to manage debts - a 55% increase on the same period last year. | The Insolvency Service said 27,644 people went bankrupt or entered into Individual Voluntary Arrangements (IVAs) to manage debts - a 55% increase on the same period last year. |
| Balancing act | Balancing act |
| The Bank has the difficult task of weighing up the effects of a possible slowdown in consumer spending caused by higher interest rates and people finding it harder to repay their debts, against its remit of reining in inflation. | The Bank has the difficult task of weighing up the effects of a possible slowdown in consumer spending caused by higher interest rates and people finding it harder to repay their debts, against its remit of reining in inflation. |
| While UK growth has been healthy, a slowdown in the international economy will sap some of its strength Steve Radley, EEF | While UK growth has been healthy, a slowdown in the international economy will sap some of its strength Steve Radley, EEF |
| However, as most recent economic news has been surprisingly strong, the majority of commentators believe that the Bank's nine-member Monetary Policy Committee (MPC) will back an increase in rates. | However, as most recent economic news has been surprisingly strong, the majority of commentators believe that the Bank's nine-member Monetary Policy Committee (MPC) will back an increase in rates. |
| High energy prices have kept inflation above target, while economic growth has continued and house prices have remained strong. | High energy prices have kept inflation above target, while economic growth has continued and house prices have remained strong. |
| Howard Archer, economist at Global Insight said recent economic data showed that there was "strong pressure for an interest rate hike". | Howard Archer, economist at Global Insight said recent economic data showed that there was "strong pressure for an interest rate hike". |
| He pointed to recent surveys showing that manufacturers and retailers were looking to pass on their higher costs to consumers by raising prices. | He pointed to recent surveys showing that manufacturers and retailers were looking to pass on their higher costs to consumers by raising prices. |
| Mr Archer added that positive data from the British Retail Consortium on Wednesday has also helped ease some concerns about a possible slowdown in consumer spending. | Mr Archer added that positive data from the British Retail Consortium on Wednesday has also helped ease some concerns about a possible slowdown in consumer spending. |
| 'Tough call' | 'Tough call' |
| However, manufacturers have urged the Bank to hold back from raising rates. | However, manufacturers have urged the Bank to hold back from raising rates. |
| While manufacturer's group EEF has admitted that the MPC's latest decision is the "tightest call for some time" it believes that, looking forward, the weight of evidence remains against a rate rise. | While manufacturer's group EEF has admitted that the MPC's latest decision is the "tightest call for some time" it believes that, looking forward, the weight of evidence remains against a rate rise. |
| "While UK growth has been healthy, a slowdown in the international economy will sap some of its strength," said EEF chief economist Steve Radley. | "While UK growth has been healthy, a slowdown in the international economy will sap some of its strength," said EEF chief economist Steve Radley. |
| "An expanding labour force also means that the economy can continue to grow at a healthy pace without generating inflation." | "An expanding labour force also means that the economy can continue to grow at a healthy pace without generating inflation." |
| Last month, Bank governor Mervyn King insisted at a House of Lords Committee meeting that a November rise in UK rates was not a "done deal". | Last month, Bank governor Mervyn King insisted at a House of Lords Committee meeting that a November rise in UK rates was not a "done deal". |
| His comments came after minutes showed that two members of the MPC had voted for higher interest rates at the committee's last meeting. | His comments came after minutes showed that two members of the MPC had voted for higher interest rates at the committee's last meeting. |
| Mr King told the committee that there were "plenty of uncertainties" over inflation, including the possibility of an economic slowdown in the US as well as UK consumers reducing their spending. | Mr King told the committee that there were "plenty of uncertainties" over inflation, including the possibility of an economic slowdown in the US as well as UK consumers reducing their spending. |