Mervyn King's warnings , plays down rate-rise rumours as number of jobless nears 2.5 million - Business News, Business - The Independent

King plays down rate-rise rumours as number of jobless nears 2.5 million - Business News, Business - The Independent: "economy faces a 'difficult period' of higher inflation and lower growth than previously expected, the Governor of the Bank of England cautioned yesterday.

Mervyn King's warnings came as the latest figures showed an unexpected lengthening in the dole queues, up 44,000 to just under 2.5 million, with youth and long-term unemployment both rising. 'The recovery is unlikely to be smooth,' Mr King said. City economists suggested that the Bank was 'not in a hurry' to raise interest rates, despite the prospect of inflation rising to between 4 and 5 per cent this spring; other experts, though, still expect the base rate to rise in May, from the current 0.5 per cent to 0.75 per cent, pushing tracker and variable rate mortgage bills up with it. Such a move could have a devastating effect on a fragile housing market.



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