Bank of England Elects to Leave Interest Rates on Hold
September 4, 2008
As expected, the Bank of England elected to leave interest rates on hold at 5.0% today for the fifth consecutive month, but expectations are rising that a disturbing economic outlook will force it to cut rates later this year. The inflation rate is forecasted to rise further in the months ahead, due to elevated pipeline inflationary pressures and growth looks set for another downward shift. Britain’s economy unexpectedly ground to a halt in the second quarter, its weakest performance since the recession of the early 1990’s. Furthermore, Britain’s ailing housing market has shown little sign of recovery, as consumer confidence crumbles and retailers and construction companies take the hit. Given the increasing divide amongst the Monetary Policy Committee, market attention now shifts to the BoE minutes released in two weeks time to gauge the timing of further policy easing.