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News - 29 August 2003
|The Only Way Is Up?|
Interest Rates Likely to Head North
No less a figure than Paul Tucker, the Bank of England’s Head of Markets and a member of the monetary policy committee (MPC) that has the final say on interest rates, has warned that the current record low rate is unlikely to last much longer.
His warning came as the latest figures showed alarming rates of personal borrowing and mortgage withdrawal (see Knowledgebase for story – Shoppers Show No Sign of Dropping Yet. August 23rd 2003). He anticipated problems for over extended households that had either been over-optimistic about future rates or their future incomes.
He counselled that all borrowers should factor in higher interest payments to make sure that they were not caught short. His view is perhaps a further indication that the unsustainable consumer boom built on personal debt rather than hard cash must come to an end and it will probably be sooner rather than later.
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