Interest Rates Stay At 4.75%

30 November -0001

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The Bank of England has kept interest rates unchanged at 4.75% for the seventh month in a row.

Last month, the monetary policy committee (MPC) said a rate rise "might be warranted in due course" if the economy followed its forecasts, the decision to keep rates static this month was widely forecast.

Business leaders welcomed the decision, warning the economy is still uncertain, welcoming the decision, the British Chamber of Commerce sounded a note of caution, warning that manufacturing was still facing hard challenges. Earlier this week official figures showed the UK's trade gap was widening, coupled with downbeat predictions added to the gloom.

The BCC warned that the modest wage growth and depressed houses, any rates increase would put the economy at risk of stalling completely.

The MPC has been very vocal in its attitude to interest rate rises stating it felt the need to push them up was unavoidable, even though the fundamental economic circumstances are still uncertain.The BCC feel that the MPC should maintain a cautious stance.

Experts and the Bank have warned rates could rise in coming months at the start of the month some commentators said homeowners should expect a further rate rise, after new data indicated house prices may be picking up again, and the strongest mortgage demand since the summer.

The opinion though is with a general election due the Bank of England will be reluctant to raise rates as it may influence voters, so it is unlikely that the rates will change until around June/July.

But Roger Bootle, economics adviser at Deloitte & Touche,said to the bbc that he feels that higher rates were a certainty, saying the MPC had concerns about the slowing rate of the housing market a development that has seen consumers tighten their belts.T

herefore any pressure on CPI inflation from higher wage inflation is likely to be more than offset by a slowdown in overall economic activity, as an intensification of the housing market slowdown weighs on household spending, and as such drop in rates could be back on the MPC's agenda soon after the election, he predicts interest rates will end the year somewhere very near 4%.

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