Bank of England Hold Rates

Bank of England expected to keep rates on hold
Despite signs of slowdown in the housing market and weak consumer confidence, most analysts predict the Bank of England’s Monetary Policy Committee (MPC) will keep the base rate on hold at 5.75% today. Although the most recent inflation data showed the Consumer Prices Index (CPI) remaining unchanged in September at 1.8%, below the Government’s 2% target, food prices are increasing and global oil prices have hit record highs. “The series of weaker data and survey evidence over the past few days has significantly shortened the odds that the Bank of England could decide on Thursday that a pre-emptive interest rate cut is justified to reduce the risk of a sharp UK economic slowdown,” said Global Insight chief economist Howard Archer. “We still favour the Bank to leave interest rates unchanged on Thursday, but there is likely to be a very lively debate within the MPC and the vote could well be very close.” However, most analysts predict the Bank will cut rates to 5.25% in two stages by mid-2008 in line with signs that UK economic growth will cool slightly next year.