Tuesday, June 10, 2008
Trading frenzy points to interest rate rises
In scenes described by one observer as "carnage", traders embarked on a massive sell-off of UK government bonds, pricing in the likelihood that the Bank's Monetary Policy Committee will lift the official base rate to 5.75pc by the end of the year. The news comes amid growing fears that Britain is facing a new bout of stagflation. The Office for National Statistics reported that factory gate inflation has risen to the highest rate since records began 22 years ago, with the price factories are charging their customers up 8.9pc on last year. Manufacturers' own raw materials costs jumped a record 27.9pc, driven higher by record oil and food prices, the figures showed.