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Bank rates look set to rise in the coming months

It looks likely the Bank of England will need to raise rates to control inflation and thereby encourage growth and recovery.

Cameron said economic growth cannot be restored in Britain without getting the record budget deficit under control, after he became prime minister earlier this month after forming a coalition government with the smaller Liberal Democrats, he has been concernedabout monetary policy.They have set a target of 2% inflation yet inflation was reported as 3.7% in April. This has caused notable concern.

With this increase in inflation in recent months, its reasonable to expect interest rates will be set to control inflation.

Analysts beleive that if the Bank of England raises interest rates to reduce the inflation, the economy will remain fragile and thereby unprotected from the sweeping government spending cuts the Conservatives have spoken of.

We will see how it all works out from the new coalition government on June 22 and how the deficit will be approached when the iminent budget reveals the finer details.