Base rate expected to rise again

Despite the Bank of England's Monetary Policy Committee (MPC) cutting the base rate of interest today (February 7th), most consumers feel rates will be higher in 12 months' time.

That is according to a study from Lloyds TSB, which revealed 27 per cent of respondents expect to see the rate of interest increase in the next year.

The figure is two per cent higher than that recorded in December and is a clear sign that consumers are not confident about the current economic outlook.

"Our survey suggests that an interest rate cut today may do little to boost confidence in the short run because of the view that it will be reversed within a year," said Trevor Williams from Lloyds TSB Corporate Markets.

"Consumers are clearly increasingly feeling the strain of higher prices - energy and food in particular - and this is starting to convince them that the Bank of England will be forced to keep interest rates high in order to keep inflation under control.

"As far as consumers are concerned, any respite granted in interest rates today will be short-lived. Even so, if we do see a cut this will ease the burden of interest payments and as such will help boost economic activity," he added.

Nationwide has published its Consumer Confidence Index for January, revealing that confidence slumped to an all-time low in the month.

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