Most economists are betting their reputation on the fact that the Monetary Policy Committee (MPC) will leave the standard base rate at 0.5% despite expected votes to move it upward to at least double at 1.0%.  Yet, it does appear that should the MPC vote on a hike that it would not be surprising as the rate has remained unchanged for almost two years.  In the face of slowly rising inflation and the increase in the cost of oil which could speed it upward quickly, the MPC might just find it necessary to put the brakes on inflation and vote for an increase. 

The February meeting of the MPC will be this week.  Should an increase in the rate come too early economists have warned that recovery could be hindered, yet they also have expressed that inflation needs to be kept from crippling recovery and pushing consumer confidence under water.  So, an increase while not expected this week, would not be a big surprise should it occur.

Howard Archer, Chief UK economist at consultancy Global Insight, has forecasted the February meeting will occur without a change in the rate but he also remarked, “If they did raise rates this week I would not be that shocked."

A Standard & Poor’s survey data showed that many homeowners are at risk of repossession should their mortgages increase only slightly.  Since these same homeowners are already in financial trouble there is little hope of them securing a remortgage to lower their financial risk at a rate increase.  So regulators have been warned that the housing market would be hard pressed to accept a high increase in the rate if any. 

Currently those homeowners seeking a remortgage to remove themselves from risk or to save on interest costs through a lower rate are many.  The demand in remortgages increased in the last few months as there was word of a possible rate hike.  How the MPC will vote this week is yet to be seen, but either way, the outcome won’t be much of surprise.