Base rate likely to be held

Posted: 03 Oct 2007 10:57:48 GMT

The base rate of interest is likely to be held in October, according to a leading economist.

The base rate of interest is likely to be held in October, according to a leading economist.

Trevor Williams, chief economist at Lloyds TSB, has forecast that the Bank of England will maintain rates at their current level.

It comes after two consecutive months without movement which followed five rate rises since August 2006.

"Despite the ongoing turmoil in world markets, we're almost certain to see the Bank of England hold rates this week," said Mr Williams.

"The housing market has proved remarkably resilient to the interest rate increases seen so far and is only just starting to slow down. Moreover, the economy remains pretty robust, with growth and retail sales figures both still strong, meaning a rate cut is almost certainly ruled out.

"However, with inflation comfortably under its two per cent target, wage inflation rising slowly - at 3.5 per cent year on year - and continuing turbulence in the credit markets, it is equally certain there will not be a rise," he continued.

The Bank's Monetary Policy Committee (MPC) is due to make an announcement on October 4th.

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