Hot on the tail of last month's interest rate rise the BBC are now suggesting that there is a "strong possibility" that the UK will see another increase this month. This speculation comes after a report that the IEA's Shadow Monetary Policy Committee (SMPC) voted to "hold interest rates for now" in a close vote.

The vote held by the leading monetary economists that monitor such policy developments was five members to four, with three of the four wanting to raise rates by a quarter of a percent and one by a half. Some of the members of the SMPC are concerned that the Bank of England have risked their credibility by allowing such a brisk rise of inflation and not taking enough action earlier on. There was therefore a general welcome for the recent increases in rates as the markets needed to believe that the inflation target would be met by the Bank of England - if this did not happen then wage settlements would begin to increase.

The reasoning behind wishing for interest rates to rise comes from those who are concerned that signals from monetary data and asset prices suggest that inflation will be on the up in the future, whilst that behind holding interest rates for now comes from a desire to "wait and see" the effects from the last few increases as the effects on inflation are not also immediately visible. The latter members were not against raising rates later on in this year however, and inflation expectations are at a "two year high" according to research by leading surveyors BDO Stoy Hayward. They also state that there s likely to be an interest rate rise in February "while the economy is able to absorb it".

The possibility of further rises is starting to worry those in business and confidence levels are dropping, and the effects of the rise of inflation have been especially noticeable in the service sector. In light of this speculation, whilst many are heralding good year for buy-to-let property it is worth keeping a close eye on the economy, as many people will be priced out of the rental market if they cannot gain enough of a yield from letting to cover even their mortgage. Finally, as always, this is bad news for first time buyers - but this could perhaps create a booming residential letting market.