Rates are going up whether we like it or not

Families should plan for interest rates to rise gradually over the next two years, the Bank of England's chief economist signalled in an interview with the Financial Times.

Spencer Dale also made it clear that he personally foresaw a difficult outlook for the economy, saying he favoured an immediate interest rate rise even though the recovery is fragile.

Mr Dale is a member of the Bank's monetary policy committee, which sets interest rates.

"I'm not particularly happy about voting to raise interest rates and doing it for nasty reasons," he said, referring to his concerns that higher interest rates were needed to rein in inflation rather than growth, which remains weak.

"I don't take lightly the impact this could have on some families," he added. "But I think the cost to our economy as a whole - were inflation to persist for longer and our credibility start to be eroded - would be even worse. "

Of greatest significance though is that his comments marked the first time that the Bank has provided guidance to households on interest rates, helping them decide whether to sign fixed interest rate mortgages or gamble on the Bank's monthly rate-setting meetings.

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