Households may suffer under future interest rate rises, according to the OBR

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The Bank of England (BoE) has indicated that it will increase interest rates “sooner and faster” than previously expected, with three possible rate rises possible in next two years.

A number of economic forecasters, including the Office of Budget Responsibility (OBR), have warned that UK households will struggle to cope with their day-to-day costs and debts if interest rates rise as predicted.

Following a recent freedom of information (FOI) request, the OBR estimated that household debt services costs were likely to increase by as much as 29 per cent between now and 2023.

The Resolution Foundation, a leading think tank, has also warned that further interest rate rises could affect millions of low-income families who are reliant on cheap credit.

The BoE Deputy Governor Ben Broadbent has said he does not believe the prospect of at least two interest rate increases in 2018 should come as a “great shock”.

In a recent interview with the BBC, hewas asked whether he agreed with media reports suggesting that interest rates are likely to double from 0.5 per cent to one per cent by the end of the year, to which he replied: “I don’t know.”

“We do not fix the path of interest rates in advance. What is fixed is our remit and rates change with the economy,” he said.