UK think tank forecasts 8% rates by 2012


The Bank of England will need to raise interest rates to as high as 8% by 2012 to avoid an inflationary spiral once the economy returns to modest growth levels, a think tank said on Saturday.

Andrew Lilico, chief economist at Policy Exchange, the think tank, said once the UK economy begins to grow moderately, the Bank of England's extraordinary monetary stimulus will lead to an inflationary spiral. He said to avoid a prolonged period of annual inflation of more than 10% the Bank will be forced to

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