LONDON - The Bank of England is all set to keep the borrowing costs unchanged when it meets on Thursday. The strong growth in the services plus the decent showing of the housing markets have made it all but certain that there will be no further rate cuts at least in this calendar year.
"The revelation of an absence of any discussion about a rate cut in October, stronger-than-expected retail sales data, rising global inflation concerns and less dovish rhetoric from the MPC's 'swing voter' Richard Lambert means we don't expect any fireworks this month and look for base rates to be left at 4 pct," said Ross Walker, economist at Royal Bank of Scotland.
In fact many analysts have categorically stated that another rate cut would not be a possibility this year. This despite traders saying that a rate cut would boost their economic outlook. “In the face of steady upward momentum on inflation . . . the case for the MPC to take back the August ‘insurance’ rate cut in the New Year is building,” said Alan Clarke, of BNP Paribas.
It is expected that the MPC will mull over the Bank’s Quarterly Inflation Report, which points to the fact that the inflation would be skirting around 2 percent for the foreseeable future. It is this factor, which will influence the MPC 's decision. Philip Shaw, of Investec Securities, said that Thursday's result was a foregone conclusion, but was non-committal about the future, “However, less certain is the outlook for interest rates further ahead, although we will know more about the Bank of England’s thoughts following the release of this month’s inflation report,” he said.
Many analysts are predicting that the Bank would skin the rates by a quarter point only in February next year.
Posted
on : Sun, 06 Nov 2005 19:50 GMT | Mortgages News
By : Paula Jenkins
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