Inflation worries to put off rate cut ? commercial mortgages

14 November 2007

Inflation increased last month to 2.1 per cent making a cut in interest rates in the immediate future seem less likely.

The CPI index, which is the government''s preferred measure of inflation, is now ahead of the target set by the Treasury.

Higher food bills and rising fuel costs, driven by record oil prices, were blamed.

The Bank of England is now unlikely to cut the cost of borrowing when its monetary policy committee (MPC) meets next month

Inflation has been a major concern for the MPC for the last 18 months and it has steadily increased the cost of borrowing as a result.

People with commercial mortgages and other debts will be disappointed as they would have been hoping for a reversal in this trend.

However, inflation remains within the target range, meaning rates are at least likely to stay at their present level.