Bank of England set to freeze interest rates
The Bank of England is likely to please British homeowners this week by freezing interest rates for the fourth month in a row, experts predict.
The Bank’s Monetary Policy Committee is set to keep the base rate at 4.75%, where it has remained since August’s quarter point rise.
A hold is likely following a stream of evidence suggesting a slowdown in house price growth and consumer spending.
Weak economic growth is also likely to influence the committee. Last month Britain's Office for National Statistics (ONS) stuck by its gloomy estimate of 0.4% growth in gross domestic product in the quarter to the end of September.
A stream of more positive news over the last week has surprised experts and adds to the likelihood of another rate hike in the coming months, although it is not expected to influence this week’s decision.
Surveys published last week showed a pick-up in activity in both the manufacturing and services sectors.
Economist Philip Shaw at Investec Securities said he was confident that the MPC would keep rates on hold this week, although he was less certain about the outlook over the next few months.
He said: “Overall we suspect that one further tightening lurks in the pipeline, possibly taking place as early as February, but maybe as late as May.”
Jonathan Loynes of Capital Economics echoed Mr Shaw, saying this week’s meeting was the most clear cut for some time.
He said the stronger data of the last week pointed towards another rise in the coming months, but looking further ahead rates may fall as the housing market and economy slow.
