Interest rates have been kept at 0.5% by the Bank of England for the 18th consecutive month, despite calls for an increase.

Rates will be kept at the record low rate for another month at least, a decision which didn’t surprise the markets, but the Bank of England is under increasing pressure from some quarters to increase the rate in order to curb inflation.

CPI inflation was 3.1% in July, above the Bank of England's 2% target rate and some argue that an increase in rates would help to slow down the rate of inflation.

A think tank has warned that interest rates could rise to as much as 8% if inflation continues to exceed the Bank of England’s 2% target.

Andrew Lilico, chief economist at the Policy Exchange, said the Bank of England may be forced to dramatically hike the base rate due to rapidly rising inflation.

Dr Lilico thinks the UK is likely to suffer from a double dip recession, followed by a boom, driven by huge monetary growth, leading to the strongest economic growth since the 1980s.