The Bank of England has raised British interest rates for the second time in three months to try to deflate a consumer debt bubble and cool the housing market.
As expected the bank's monetary policy committee today hiked its key rate by a quarter of a point to 4%.
Last November the Bank of England became the first of the world's four major central banks to hike rates for several years.
The BoE said in a statement accompanying its decision that it was still worried about the continued strength of the housing market and consumer debt levels.
'Although sterling has appreciated, continued growth above trend means that inflationary pressures are likely to pick up gradually over the next couple of years,' it added.
It also said the global economic recovery had become more even and growth in the second half of last year was 'above trend' in Britain while business surveys pointed to a further pick-up.
Data yesterday showed that Britain's service sector grew at its fastest pace since June 1997 in January. The CIPS/Reuters services activity index rose to 59.8 from 58.5 in December. Britain's biggest mortgage lender Halifax also said yesterday that house prices rose by a strong 2.2% during January as a shortage of homes for sale continued to push prices up.
