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CBI predicts rate rise

The Confederation of British Industry (CBI) has suggested that the Bank of England will increase interest rates again before the end of the year.According to the CBI's latest quarterly economic survey, the bank's monetary policy committee (MPC) will need to raise the base rate once more in the autumn to keep a lid on rising inflation levels in the UK.The interest rate has been raised four times since August last year, meaning it now stands a full percentage point higher than it did a year ago, at 5.5 per cent.But inflation has continued to rise and as such the CBI claims a further hike in the base rate will be necessary to bring down inflation to around the government's target of two per cent. The CBI added that, if the MPC does raise the interest rate to 5.75 per cent in the autumn, it will have the necessary impact on inflation and allow the bank to introduce a cut in the base rate during 2007.

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