Pressure on Bank of England to hike interest rates

All eyes are on Bank of England policymakers on Thursday as they face pressure to lift interest rates in response to rising inflation.

Many analysts have predicted that rates will rise to 0.25% when the decision is announced at lunchtime.

The UK's main interest rate_ set by the Bank's Monetary Policy Committee (MPC)_ has been at an all-time low of 0.1% since the pandemic began.

But prices have been rising sharply since the economy reopened.

The Bank itself has acknowledged that inflation could peak at 4% or even 5% before cooling again - far above its 2% target.

Charlie Bean_ a former deputy governor of the Bank who is now a senior member of the Office for Budget Responsibility_ told the BBC that the fiscal watchdog expects interest rates to reach the pre-Covid level of 0.75% within the next 18 months.

"Interest rates really have been very low during the pandemic_" he said. "So it is reasonable to expect to see some movement up."

He added: "The question for the Bank is_ do they move this month?"

Torsten Bell_ chief executive of the Resolution Foundation think tank_ said the decision was "finely balanced"_ because the economic recovery was "showing signs of weakening"_ while prices rises were largely down to global factors and outside the Bank's control.