Franky on Finance

The City is betting on the previously unthinkable prospect of interest rates rising within months.  Investors are gambling that rates will have to increase from the current level of 5% to bring inflation under control.  Most had previously expected rates to fall to about 4.5% by the end of the year.  Investors now fear that at least two, and possibly even three, quarter-point base rate increases are on the cards.  City economists said that at the very best all hopes of an interest rate cut this year are now out the window.