BoE: 'Further rate rise needed to curb inflation'

British interest rates will need to rise one more time for inflation in the UK to return to its 2% target within two years, the Bank of England indicated today.

In its quarterly report, the Bank said inflation was set to decline sharply over the year, settling around the Government’s 2% target by the end of 2008, but this was based on City expectations for one further quarter-point rise in interest rates to 5.5%.