Financial experts in Gloucestershire have been reacting to the Bank of England's warning that interest rates may go up earlier than expected.

Bank policymaker Michael Saunders, who sits on the Bank's interest rate-setting Monetary Policy Committee, warned that rates could go up 'significantly earlier' as inflationary pressures grow on the UK's economy, suggesting they could rise as early as this year.

In Gloucestershire, Mark Hartery, director of The Bespoke Banking Consultancy Limited, said: "The speculation from Michael Saunders at the Bank of England about earlier interest rate rises seems to be following the market pricing we have seen for a few weeks now with lenders tweaking their rates upwards.

"With inflation running at a nine year high, interest rate rises are one of the tools that the Bank have to try and fight back but there will be a fine balance between tackling inflation and pouring more bad news on households and businesses as we see other factors combining such as fuel costs, shortage of HGV drivers, the end of furlough and of course businesses now starting to make inroads into their CBILS (Covid loans) and bounce back loans.

"The record low cost of borrowing has been the only oasis for many during a difficult period for all but given all the factors it wouldn't surprise me if we saw an earlier rate rise than previously predicted."

Richard Neale, director Ops-Box Group Ltd, said: "There is a certain inevitability of interest rates rising in the short term.

"Firstly, we are well aware that inflation is rising steadily, and predicted to increase again as costs continue to increase in a post pandemic and post Brexit market.

The cost of goods in general, of course most evident at the moment with energy prices, are heading higher as supply chains are tested, causing inflation to rise. One traditional way of controlling inflation has been to raise interest rates.

"With a perfect scenario of costs rising and the economic recovery from the pandemic being stronger than predicted, we can see every reason why interest rates would be raised, certainly in the short term.

"The prediction is that inflation will be back under control at some point in 2022, but intervention in the form of higher interest rates now does make economic sense.

"It remains to be seen though how this affects savers and borrowers. Will our lenders and deposit taking institutions pass on the higher rates, particularly if the rise might only be short term?

"Savers will hope so, as they've had a low interest rate environment for many years, but borrowers will be less keen. Mortgage rates are arguably unsustainable at such low levels as we see now, so a rise on that front might be just around the corner."