Raising interest rate 'increases risk of double-dip recession'

There could be another fall in the UK’s economy if interest rates are raised too quickly.

This is according to strategy, risk and economics director at Hometrack Gary Styles, who warned that a ’double-dip’ recession could be created if there is a sudden rise in rates.

He noted that the economy will be ’a little fragile’ for the immediate future, meaning the Bank of England will have to give careful consideration to its actions over the next few months.

’If you tighten all the policy instruments at a time when the economy is quite weak, you do run that risk of pushing the economy back,’ Mr Styles remarked.

He added that it is ’a bit premature’ to assume that the economy in the UK is well on the way to recovery, especially as the effects of any fiscal tightening that occurs after the general election are yet to be seen.

Last week Monetary Policy Committee member Andrew Sentance told the Guardian that any rapid increase in inflation may force the Bank to put the base rate up.ADNFCR-2318-ID-19572854-ADNFCR