More interest hikes on way, say experts

THE BANK of England's latest interest rate hike was smaller than expected in financial markets thanks to the energy cap freeze lowering the inflation outlook, but experts are predicting more rises to come as the Government slashes taxes to boost growth.

Its move to deliver a 0.5 percentage point rise to 2.25% saw it defy market expectations for an increase to 2.5% and is at odds with its US counterpart, the Federal Reserve after it pressed the button on its third 0.75 point hike in a row.

The Bank's policymakers - albeit divided on the decision showed a more cautious approach in their decision, given their indication that the UK is already in recession this quarter and now that soaring inflation will peak at just under 11% against the 13.1% they had warned over in August.

Martin Beck, EY Item Club's chief economic adviser, said: "The MPC's decision to forgo a bigger rise in rates makes sense.