The Bank of England raised its main interest rate today for the second time in three months.
The quarter-point rise to 4 per cent was widely expected after recent official and survey data showed the economy was gathering momentum.
Many economists expect rates to end the year at 4.5 per cent through two more quarter-point rises after the monetary policy committee made clear last month that it wanted to moderate the growth of consumer demand by putting up the cost of borrowing through gradual rises.
Should the economic momentum of recent weeks continue unabated then the Bank will likely find itself in the position of having to tighten policy again before mid-year, said Ciaran Barr, economist at Deutsche Bank. He expected future increases to be both gradual and modest.
