Interest rates look set to rise to 6% before the end of the year aFter the Bank of England yesterday forecast a slowdown in consumer spending to bring down inflation.

Mervyn King, the bank’s governor, said it was ‘impossible’ to tell whether the recent stock market falls and the widening of credit spreads would lead to a more serious disruption, or ‘a more gradual easing of pressure that allows credit spreads to widen to more sensible levels’.