Home owners should prepare for a series of interest rate rises to around 5%, a Bank of England official warned today.

Paul Fisher, a member of the Bank's rate-setting Monetary Policy Committee (MPC), says officials want the current 0.5% base rate to rise to a "normalised" level 10 times as big.

In an interview with The Daily Telegraph, he said "the speed at which that happens is another thing entirely" (see The Remortgage Guide).

He told the paper: "We hope people are aware interest rates at some point will go up again and that they will head back to a normalised position.

"The speed at which that happens is another thing entirely. We would only tighten quickly if the strength of the economy demanded it.

"So, obviously, we would not be putting up rates so quickly as to cause a negative reaction. That's something we can try to anticipate and build in. So we would put rates up, see what the effect is and then judge how quickly to go."

Asked if the goal was to get interest rates to about 5%, he added: "Yes, but the reaction of people to those changes in rates is part of the process of information that we have to build into our forecasts and policy decision.

"It's not something where we would put rates up and ignore the reaction to it."

Minutes of the Bank's December rates meeting revealed members of the MPC were split three ways again this month when they left the 0.5% rate unchanged.

But there were increasing concerns among the committee over the Consumer Prices Index inflation after it rose again in November to 3.3%. The Retail Prices Index, a more representative measure as it includes housing costs, is higher at 4.7%.

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