Bank of England to hold rates again

It is expected that base rates will be frozen at 4.75% by the Monetary Policy Committee (MPC) for the sixth month running.

Any lingering hopes of a cut in rates were dashed by recent figures showing stronger than expected economic growth, up 0.7% in the last quarter.

Minutes from the last MPC meeting also gave clues that a rate cut is unlikely.

The Bank said inflation had moved "a little more rapidly than expected", up 1.6% in December, closer to its 2.0% target.

There was "insufficient ammunition" to require a change in interest rates this month, said economist Philip Shaw of Investec, the International specialist banking group.

"On balance we still believe that base rates will remain at 4.75% for the rest of the year," Mr Shaw said.

"But we are reluctant to rule out a further tightening at some point over the next six months."

 

8th February 2005

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