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Have UK Interest Rates Bottomed Out?

While just a few weeks ago the prospect of further reductions in UK interest rates seemed to be a certainty, things have really changed over the last couple of weeks. First we saw signs that inflation was making a comeback and set to creep past the 4% level and then we started to hear concerns from within the Bank of England with even the most optimistic of members admitting that interest rates could not move any lower at the moment.

However, this mood of disappointment has worsened over the last few days with some analysts even daring to suggest that interest rates will actually rise by the turn of this year. As the Bank of England forecast inflation to move to over 4% during the summer period, they have also indicated it is unlikely to move down towards the government target of 2% for at least another two years.

As more and more knock on affects from the rising price of oil feed into the economy it seems that the cost of living is set to rise still further. Even with the economy as depressed as it is at the moment it seems that we may all have to tighten our belts a little more, although for some people it may be too late.

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