Experts predict no rise in UK interest rates
The Bank of England is set to give homeowners a break from higher mortgage costs this week by keeping interest rates on hold.
Experts predict the Bank’s Monetary Policy Committee (MPC) will leave the base rate unchanged at 4.75% on Thursday.
They say the five hikes since last November are now beginning to take effect in the form of falling house prices and weaker consumer borrowing and retail sales.
The Bank is likely to hold rates at least for this month to assess whether the downturn is temporary or more longer lasting, they say.
Simon Rubinsohn, chief economist at stockbroker Gerrard, said: “A no-change outcome to the September MPC meeting is a dead cert.”
David Buik of City financial spreadbetting firm Cantor Index said: “Perhaps the MPC will have the luxury of easing up on its vice-like grip on consumer borrowing.”
Philip Shaw of broker Investec went a step further by predicting the Bank would hold rates for the rest of 2004, raising them to a peak of 5% early in 2005.
“If the housing market downturn is genuine this time, we cannot see the MPC raising rates again this year,” he said.
Employers organisation the CBI said a pause in rate rises this month would be welcome.
CBI head of economic analysis Doug Godden said: “The economy needs some breathing space and the Bank of England should oblige.”
