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Yesterday`s decision by the Bank of England`s monetary policy committee (MPC) to raise interest rates will negatively affect those with high levels of debt, an economist has claimed.
Trevor Williams, chief economist for Lloyds TSB corporate market, said that the quarter-point increase to 5.5 per cent will "add to the pressure on those who are on stretched incomes".
He explained that high interest rates "will push up the interest payments on the debt, [which] will push up the overall repayment on debt".
It is likely that people will have less to spend on going out and casual purchases, he added.
When asked whether interest rates are likely to rise again in the near future, Mr Williams said that the economy will probably "show signs of slowing down" later this year, meaning that the latest increase "will be enough".
The MPC has raised the interest rate four times since last summer.
