The Bank of England is expected to increase interest rates up to four times over the coming year, according to City figures. This follows a surprise 0.4 per cent growth in the UK economy in July, despite earlier forecasts of a halt in growth.
Economists suggest that Governor Andrew Bailey is widely anticipated to oversee an interest rate hike in November. However, the Monetary Policy Committee (MPC) is expected to keep rates unchanged at its meeting next week.
Money markets are currently factoring in four quarter-point rate increases by July next year. This would see the Bank rate climb from its current 3.75 per cent to 4.75 per cent within the next 12 months.
Susannah Streeter, Wealth Club chief investment strategist, stated that the stronger-than-expected growth in July makes an interest rate hike before Christmas "a touch more likely." Analysts also noted that Friday's GDP figures indicate the UK economy could withstand a rate increase this year.