Interest rates could hit 5pc after ‘scalding’ inflation, City fears


Traders have ramped up bets on further Bank of England interest-rate rises peaking at 5pc later this year after inflation unexpectedly remained in double digits.

The consumer prices index measure of inflation fell slightly to 10.1pc in March from 10.4pc in February.

However, analysts had expected a drop to 9.8pc, with the unexpectedly higher reading sending the pound 0.3pc higher against the dollar.

The yield on two-year Government gilts, which are most sensitive to interest rate expectations, have risen 10 basis points to 3.76pc.