Experts predict no change on interest rates

News Article - 30 May 2008
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Analysts are forecasting that there will be no change of interest rates at the Bank of England's rate-setting meeting next week.

The bank's monetary policy committee (MPC) is planning to make its June decision on interest rates on Thursday and is widely expected to hold the base rate at five per cent.

Companies struggling to manage their finances in the wake of the global credit crunch and rising inflation rates can invest in accounting software to make the process easier.

All eight economists and financial institutions surveyed predict that there will be no further reduction or increase in the cost of borrowing on June 5th and lender Nationwide forecasts only a 20 per cent chance that the MPC will choose to cut interest rates by a quarter point to 4.75 per cent.

Howard Archer, chief European and UK economist at Global Insight, commented: "With inflation likely to approach 4.0 per cent this summer, inflation expectations elevated and rising, and firms still keenly looking to raise their prices to support their margins in the face of elevated input costs, the Bank of England will tread extremely carefully on the interest rate path for the time being."

Inflation rates in Britain have been pushed up to three per cent year-on-year by rising food prices, retail prices and fuel bills, while consumer spending and the housing market have slumped in the wake of the global credit crunch.

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