Interest rates 'unlikely' to be upped
Wednesday, 07 Mar 2007 12:07
The Bank of England will announce its monthly decision tomorrow
Interest rates in Britain are likely to remain at their current level of 5.25 per cent ahead of tomorrow's decision from the Bank of England.
The Bank's monetary policy committee (MPC) voted 7-2 to hold base rates last month following January's shock quarter of a per cent rise.
But with consumer price index (CPI) inflation showing signs of abating, as well as robust manufacturing data in the last quarter, the majority of economists are looking to a successive hold from the MPC.
Mixed new year retail figures, gloomy consumer confidence, subsiding house prices and the fact that two committee members voted for a rise last month do however mean the decision is far from a formality.
According to Chiltern Debt Management, an interest rate rise tomorrow could represent "disaster" for Britons struggling with debt.
"An interest rate rise in January will always have a big impact, but when looked at in combination with some of the most recent personal debt facts and figures; it does appear that the UK is lurching towards an untenable level of personal debt," the firm's general manager Jackie Newton commented.
"This situation that can only be exacerbated if the MPC opts to increase interest rates again this week."
And Howard Archer of research firm Global Insight has cautioned that the MPC remain on "full alert" against medium-term inflationary risks.
"We expect the MPC to hold fire on Thursday after another split vote, given a general desire to wait a little longer to see what impact the relatively quick three interest rate hikes enacted since last August are having on economic activity," predicted the company's chief UK and European economist.
"However, we still expect the Bank of England to lift interest rates to 5.5 per cent in April or May as a precautionary measure aimed at containing medium-term inflation risks."