Interest rates set to rise above 0.5% for first time since 2009 as economy improves – but expert warns it could be tricky to hike them any further before Brexit

Britons could be in for higher borrowing costs as economists expect interest rates to go up next week.
Confidence the economy has rebounded after a blip in the first three months and that wages will improve in the coming months are major factors in the potential rise.

If the Bank of England’s nine policymakers do raise the base rate from 0.5 per cent to 0.75 per cent on Thursday, it would be the highest it has been since March 2009, when it was cut from one per cent to 0.5 per cent during the financial crisis.

The predictions come as doubt was cast on a possible hike earlier this month. That came after inflation held steady at 2.4 per cent, instead of rising to 2.6 per cent as economists expected.

However, it still looks more likely that policymakers will vote to raise interest rates by a small 0.25 per cent on 2 August, with recent data suggesting economic growth rebounded in the second quarter after a slowdown at the start of the year.

A survey of nine economists by website shows all of them predict a base rate rise, mostly because they believe the economy has improved, inflation is set to go up and so are wages, despite having stagnated so far.

Wage growth (excluding bonuses) slowed to 2.7 per cent while the figure including bonuses remained stuck at 2.5 per cent in the three months to May, according to the latest figures by the Office of National Statistics.

However, the economy is predicted to have grown by 0.4 per cent in the second quarter, up from 0.2 per cent between January and March.

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