LONDON - The Bank of England today elected to keep the interest rates on hold at 4.5 percent. Even though this move was largely expected, analysts are still skeptical about which way the Bank is going to move in Future.
Last month, Governor Mervyn King had indicated that perhaps the Bank would up the rate in the future, but although this looks unlikely given the state of the economy, analysts say that nothing about the Bank is predictable at this stage.
Additionally, the minutes of last month's monetary policy committee meeting had shown that the decision to leave rates untouched was unanimous. It is very unlikely that such a scenario would have changed drastically in just 30 days although the gloomy economic conditions do warrant another rate cut.
"The MPC's decision was highly likely to have been unanimous, and should not have surprised anyone," said Howard Archer, chief UK economist at Global Insight. "The MPC could not have made it any more obvious that they are firmly in 'wait and see mode' amid a particularly uncertain inflation and growth environment."
The MPC's decision comes just days after Chancellor Gordon Brown was forced to slash is growth forecasts by more than 50 percent to 1.75 percent. "The CBI's forecasts show that consumer spending will continue to be constrained by high energy costs and an unwillingness to borrow given high personal debt levels, leaving the economy growing only modestly into next year," observed Ian McCafferty, the CBI's chief economic adviser, adding that the Bank must be prepared to slash the rates early next year so that the inflationary pressures are lessened. Mr. Archer was even more emphatic in saying that February was the month for the rates to fall downward.
Posted
on : Thu, 08 Dec 2005 20:20 GMT | Loans News
By : Mark Richardson
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