Borrowers warned of imminent rise in United Kingdom interest rates

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The deputy governor also said the Bank of England's Monetary Policy Committee was keeping an open mind about further rises to United Kingdom interest rates.

At the time of the previous inflation report in November Carney had told markets to expect the era of loose monetary policy to be over, as the BoE was considering, in line with the movement's of the U.S. Federal Reserve, to further raise the bank rate.

Economists think it is likely that the next rate rise will come in May, but are not certain.

"The flip side of interest rate rises for defined benefit scheme members is that, should they increase by more than expected, the record high transfer values that we have seen are likely to come to an end".

A hike in May would be the bank's second in six months following one in November, which was the first in a decade.

The pound's drop simultaneously pushed up import costs, notably of food and energy, and weighed on economic growth by reducing living standards as price rises started to outpace wage growth.

"The projections also assume that, in the interim, households and companies base their decisions on the expectation of a smooth adjustment to that new trading relationship".

That is a major assumption, not least because the minority Conservative government appears deeply split on Brexit.

Prime Minister Theresa May wants to clinch a transition deal next month to secure full access for Britain to European Union markets for about two years after it leaves the bloc in March 2019.

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Reminders remain of the fragility in Britain's economy as it faces up to leaving the EU.

The Bank also released the letter sent by governor Mark Carney to the Chancellor of the Exchequer, Philip Hammond, to explain why inflation had breached the target rate of 3% in November.

"Investment is being restrained by Brexit related uncertainties".

This week's stock market volatility is not a foreshadowing of a crash like that seen in 2007, a deputy governor of the UK's central bank has said.

Beyond this, the bank's updated growth forecasts indicated that the UK's economy is expected to expand at a faster pace than previously thought.

'All this points to rising interest rates, both here in the United Kingdom and in other major economies. That is expected to push up inflation, according to the Bank. From 3 per cent now, the bank is projecting the annual rate of consumer price inflation to fall to 2.3 per cent this time next year and 2.2 per cent the year after.

The comments were a sign that the bank was turning its sights to tackling price growth over two years rather than three. Rates were kept at 0.5% which was widely predicted, but it was comments from the Monetary Policy Committee (MPC) following the rate decision that caused a significant spike for Sterling.

But there was a caveat.

It points out that the United Kingdom economic engine still "remains restrained by Brexit-related uncertainty" which is "the most significant influence on the economic outlook".