Interest rate forecast: more shocks ahead?

Will 2007 be another year of interest rate shocks? asks John Stepek. The Bank of England's decision to play it safe last month could have stored up trouble for the future.

The Bank of England decided to keep interest rates on hold at the start of last month - perhaps an early Christmas gift for mortgage holders and the over-indebted.

But Mervyn King and his chums at the Monetary Policy Committee might have been kicking themselves after they read the latest inflation figures. The Bank's target inflation rate - the consumer prices index (CPI) - grew at an annual rate of 2.7% in November, the highest since records began in November 1995.

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John Stepek

John Stepek is a senior reporter at Bloomberg News and a former editor of MoneyWeek magazine. He graduated from Strathclyde University with a degree in psychology in 1996 and has always been fascinated by the gap between the way the market works in theory and the way it works in practice, and by how our deep-rooted instincts work against our best interests as investors.

He started out in journalism by writing articles about the specific business challenges facing family firms. In 2003, he took a job on the finance desk of Teletext, where he spent two years covering the markets and breaking financial news.

His work has been published in Families in Business, Shares magazine, Spear's Magazine, The Sunday Times, and The Spectator among others. He has also appeared as an expert commentator on BBC Radio 4's Today programme, BBC Radio Scotland, Newsnight, Daily Politics and Bloomberg. His first book, on contrarian investing, The Sceptical Investor, was released in March 2019. You can follow John on Twitter at @john_stepek.