BCC: Rates to hit 1% by year end

The British Chambers of Commerce (BCC) has predicted interest rates will hit 1% by the end of this year despite the lacklustre economic recovery.

The UK business group said rates will rise faster than it previously expected after it raised its inflation forecast for 2011. The group said annual CPI inflation for 2011 will be 4.5%, ahead of its previous forecast of 4.2%, while next year's prediction of 2.7% is also higher than its previous estimate of 2.3%. As a result, it expected the government to react by raising rates in August, with further action leaving rates at 1% by year end. The figures come after the BCC cut growth forecasts, warning the royal wedding had impacted UK GDP. Its new forecast is predicting growth of ...