Bank of England may have to raise rates to 5% to fight inflation

The Bank of England could be forced to raise interest rates to 5% this summer, Goldman Sachs has warned, as Britain struggles to bring down the highest rates of inflation among the G7 group of advanced economies.

Report informs via The Guardian that Threadneedle Street is widely expected to increase the cost of borrowing for households and businesses on Thursday for a 12th time in succession, with financial markets anticipating a quarter-point rise to 4.5%.

However, the US investment bank warned that households and businesses could face further increases in the cost of borrowing as the central bank struggles to bring down the highest rates of inflation in 40 years to more sustainable levels.

It comes with inflation stuck in double digits after falling by less-than-expected in March, standing at 10.1%, as British households grappled with the fastest annual rise in food and drink prices since 1977.