BDO Stoy Hayward expects to see two interest rate rises by late-summer of 2005.
The latest BDO Business Trends Report reveals overall economic growth remains healthy, and it expects to see optimism rise again following the Chancellors speech on 16th March.
Therefore, BDO Stoy Hayward predicts that there will be two more quarter point interest rate rises in coming months, taking the interest rate to 5.25 per cent.
As the April meeting of the Monetary Policy Committee may fall within a general election campaign, there will be a temptation to start raising rates this month, after Thursdays MPC meeting according to the report.
If not, the Bank of England will probably delay until after the election and then make two increases between May and August.
BDO Stoy Hayward partner Peter Hemington says: “Economic growth has been steadily accelerating, and there is a growing feeling that it is crunch time. It looks as though the MPC will have no choice but to raise interest rates significantly by the middle of the year.”