Since March 2009 the base interest rate has remained the lowest level in the Bank of England's history, having dropped to just 0.5 percent.
This step was taken due to the immense problems Britain was suffering from due to the recession and due to the effects of the global financial crisis.
This meant many homeowners became unable to maintain mortgage repayments and that resulted in repossessions levels soaring.
Given that the base rate has stayed at this all time low for over 12 months there is now some speculation as to how rapidly it will increase.
Some experts consider that the base rate might just increase to around 1 percent or 1.25 percent over the next year. However, others consider that it could increase to higher levels due to the high rate of inflation .
Inflation is higher in Britain than in many European countries: it is 3.4 percent in Britain whereas it is just 1.1 percent in Germany, 1.4 percent in Italy, and 1.6 percent in France.
In addition, energy costs have increased more in the UK than in other European countries, with the prices going up by a huge 8.5 percent in the last 12 months compared to 4 percent in Germany and just 0.6 percent in Italy.
Interest Rates May Increase to High Level of Inflation
Thu, 06 May 2010
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