A highly respected national mortgage broker claims markets are confidently predicting that the Bank of England base rate will increase to 5.0 per cent.

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Currently the base rate stands at 4.25 per cent however the financial organisation says the Bank of England is seriously considering to raise the rate in an attempt to slow down rocketing prices.

The Office for National Statistics latest figures shows that in spite of positive market expectations inflation just dropped to 10.1 per cent in March.

A statement from the organisation, says: “Expectations were to see the Consumer Price Index rate of inflation fall to 9.8 per cent from 10.4 per cent in February. Instead, the figures revealed the seventh month in a row of double-digit inflation.”

Grant Fritzner, the Office of National Statistics chief economist, says of the stubbornly high inflation rate: “The main drivers of the decline were motor fuel prices and heating oil costs, both of which fell after sharp rises at the same time last year.

“Clothing, furniture and household goods prices increased, but more slowly than a year ago.

“However, these were partially offset by the cost of food, which is still climbing steeply, with bread and cereal price inflation at a record high.”

The next meeting to be held  by the Bank of England’s monetary policy committee that determines the base rate is not far away on Thursday May 11.

At the same time a business consultancy sends out a stark warning that although the Bank of England’s decisions raised savings rates, it believes there is a real danger of the UK slipping into recession.

A spokespersdon for the consultancy, says: “The best rate for a 12 month savings account is higher now than that of a 5-year fixed rate savings account according to Moneyfacts data. This is great news for savers only wanting to lock their money away for a short period – but if flips interest rate logic on its head. Normally, the longer the term the better the rate, you’re compensated for your loyalty.

“The yield curve normally plots low for one-year fixed rate, ticking upwards from bottom left to top right. This shape usually indicates that we are in a period of economic expansion, optimism abounds. An inverted yield curve is a line that sweeps downwards – top left to bottom right, and indicates the opposite, a period of economic contraction – a recession. A flat line usually means change is afoot!

“Currently plotting the best savings rate for one, two, three and five year accounts the line sits somewhere between all three, trending slightly down towards the five year.