Bank will hold fire on base rate decision

Posted: 04 Sep 2007 12:04:04 GMT

The base rate should remain at 5.75 per cent at least for the next month, according to a leading financial expert.

The base rate should remain at 5.75 per cent at least for the next month, according to a leading financial expert.

Howard Archer, chief UK economist at Global Insight, predicts that the Bank of England will adopt a 'wait and see' approach in September.

It comes amid a certain level of confusion as to what the Bank's next move will be after the organisation itself predicted that at least one more rise was needed to bring inflation below two per cent.

This was promptly followed by the revelation that inflation fell to 1.9 per cent last month and Mr Archer believes that this will be enough to keep interest rates down for now.

"Events since the August meeting seem most unlikely to have pushed the MPC [Monetary Policy Committee] any nearer to raising interest rates again," he said.

"Indeed if anything, they have diluted the case for an interest rate hike, at least in the near term.

"Global credit and financial market problems and uncertainties have deepened over the past month, while UK consumer price inflation unexpectedly dipped sharply," added Mr Archer.

Website Fool recently warned homeowners to prepare for a rate rise after lending figures from the Bank of England showed that borrowing increased in some quarters between June and July.

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