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Rics: Further rate rises could occur

The Royal Institution of Chartered Surveyors (Rics) has warned that the recent increases in interest rates may be followed by further rises, which could affect business finance in 2007.

According to the organisation, the news that consumer price inflation had risen to three per cent "went a long way to explaining" the decision made by the Bank of England's monetary policy committee.

Following the January 11th 2007 decision to increase rates, which will affect consumers with mortgages, loans and overdrafts, the Bank cited strong economic growth as a reason for the move.

However, Rics has suggested that "wider concerns about inflation in the economy would also have been at the forefront of discussions within the Bank".

The group highlighted that the January wage bargaining period may push wage growth to the 4.5 per cent limit which is seen by the Bank as being consistent with meeting the inflation target.

Rics has also warned that the Bank may decide to increase rates again in February supported by a new set of inflationary forecasts.