Interest rates could rise next week - Skandia

There is a "real chance" the Bank of England will raise interest rates as early as next week, says Skandia, with subsequent hikes pushing rates up to 3% by the end of next year.

Skandia head of asset allocation Rupert Watson says the Bank could raise rates from their historic low of 0.5% next week amid signs the economy is strengthening and eurozone risks diminishing. "Given what has happened over the past few weeks, there is a real chance interest rates will rise next week - 10 February," he says. However, he adds his "guess" is the MPC will hold fire on hiking rates until the inflation report meeting in May. "Thereafter, they might raise rates by 0.25-0.5% per quarter taking rates to well over 2% (possibly over 3%) by the end of 2012." Watson previous...