Rate hikes 'from May' forecast as BoE inflation report due

A series of quarter-point interest rate hikes will begin in May, according to analysts examining Bank of England governor Mervyn King's latest obligatory letter to the Chancellor.

In the letter to George Osborne that was triggered by a 4% increase in consumer prices last month, King said inflation was "likely" to return to the Bank's official 2% target on "the assumption the Bank rate increases in line with market expectations". Analysts interpreted the letter as a declaration rates, which have been held ata record low of 0.5% for almost two years, will rise a number of times in 2011, beginning in May. The City will be looking for more clues in today's quarterly inflation report as to what will happen to rates over coming months, while the strength of the econo...