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Interest rates expected to rise twice this year

Bank governor Mark Carney has said a rate rise is "likely" this year, but any increases will be gradual.

However, the EY Item Club, a leading UK economic forecast group, said a tight labour market and firming earnings growth were likely to fuel "hawkish instincts" at the Bank.

The forecaster predicted GDP growth of 1.6% this year and 1.7% in 2019.

It said the expected rate rises would allow the Bank to "gradually but steadily normalise monetary policy".

UK interest rates currently stand at 0.5%. Many economists and investors in the markets believe that the Bank's Monetary Policy Committee (MPC) will vote for a 0.25% rate rise at its May meeting.