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Will the UK follow India in rate hike?

Today's news that the Indian authorities have been forced to push base rates higher because of strong inflation could be a perfect replica of the forthcoming UK situation. While the Indian economy may well be slightly stronger than the UK this perfectly illustrates how inflation is now becoming a major problem for some governments around the world. It is the influence of outside parties, such as the oil market, which is pushing the cost of living higher in many areas and putting pressure on businesses and service providers. So could the UK go the same way?

We have already seen calls from some areas of the UK economic arena for UK base rates to be gradually increased to try and offset the threat of inflation. So far the Bank of England has managed to resist the temptation although this is definitely something on the agenda and something which will come to the fore in due course. Despite the fact that many analysts expect UK base rates to remain unchanged for at least 12 months this will depend upon the strength of inflation and the prospects for the UK economy.

How bizarre would that be for the Bank of England to increase base rates at a time when many companies and many people are still struggling to survive financially?

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