A survey of 60 economists has shown that they unanimously believed that the Bank of England will raise interest rates to five per cent when it meets this week.

On the currency exchange markets this morning, the US dollar traded at
$1.2711 on the euro, down from $1.2718, and at 118.10 yen, up from
118.01 yen.

All 60 economists interviewed by Bloomberg predicted that interest rates will hit a five-year high on the back of strong economic growth and energy costs.

Inflation has been running at above the bank's target rate for the past five months. Analysts added that higher borrowing costs would do little to slow the economy.

"The risks of not tightening are clearly that later on, wage pressures begin to pickup, inflation gets in the system and they'll then have to raise rates further and faster," said Daiwa Securities economist Grant Lewis.