Interest rates will rise 'in coming months' as inflation set to reach 5% in spring

Huw Pill said with inflation approaching five percent this spring, it would be “necessary over coming months” to increase the base rate to suppress the soaring cost of living. The base rate is at a record low of 0.01 percent.

Mr Pill told the Confederation of British Industry he was preparing to vote in favour of a hike in rates on December 16 if the potential hit to the economy was minimal.

But Michael Hewson, at CMC Markets, said the new Covid variant gave the Bank of England “wriggle room” over a rise next month.