An influential think tank has warned that interest rates may have to rise to 8% to combat rampant inflation.
…but the Policy Exchange expects some very sharp rises
The warning comes from the Policy Exchange, whose chief economist, Andrew Lilico, argues an economic recovery will unleash a wave of money.
Doctor Lilico believes a double-dip recession is likely, which would then be followed by a boom.
He argues that the US and UK monetary authorities will respond to this by printing more money.
Coupling that, he says, with the planned deep government spending cuts, would lead to the fastest economic growth rate since the late 1980s.
Doctor Lilico says in a research note: Once the economy gets growing sustainably, there will be a huge expansion in the money supply, which will lead to inflation.
The Bank has already pumped…
Originally posted here:
Bank rates ‘may hit 8%’ by 2012
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