Stay up to date with notifications from The Independent

Notifications can be managed in browser preferences.

Bank keeps interest rates on hold

Megan Davies,City Editor,Pa News
Thursday 06 June 2002 00:00 BST
Comments

The Bank of England gave mortgage owners another month's reprieve today as it left interest rates on hold at 4 per cent.

The decision means interest rates have been held at their 38­year low for seven months.

However City analysts are not expecting the party to last, and are forecasting the Bank's Monetary Policy Committee will raise rates either in July or August to dampen the booming housing market.

Today's decision was seen as a "balancing act", with surging house prices and a robust high street on one side and a fragile economy and wobbly recovery in the manufacturing sector on the other.

Figures this week showed another surge in house prices in May, with Halifax's survey recording a 4.2 per cent hike.

And although there are signs the high street is cooling – a CBI survey yesterday showed retail sales in May rose at their slowest pace for seven months – retail sales are also robust.

But the manufacturing sector, although showing some recovery, is not out of the woods yet, while latest GDP figures showed the economy stagnated for two quarters in a row.

Ross Walker, economist at Royal Bank of Scotland said: "The decision is very much as expected but it starts to get quite interesting from here on."

He was expecting the first interest rate rise in August.

Join our commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies

Comments

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged inPlease refresh your browser to be logged in