Inflation will hit rates soon

A LEADING economist has predicted that the UK's interest rates will have to rise within months, due to soaring levels of inflation and a slowdown in growth.

The predication came after the Bank of England voted to keep the UK's interest rates at their record low of 0.5 per cent, despite warnings that inflation could soar to 5 per cent in the month ahead.

Bank of England committee members agreed the move, which means monthly interest rates have been set at the same level since March 2009.

The move was agreed despite a sharp rise in inflation to 3.7 per cent in December.

Neil Prothero, of the Economist Intelligence Unit, forecast the Bank would have to increase interest rates by at least 0.25 per cent by the middle of 2011.