UK interest rates stay 'on hold'

09-Feb-2007

The Bank of England's monetary policy committee (MPC) will leave the base rate of interest unchanged this month, which may be of interest to first time buyers.

Although interest rates will now stay 5.25 per cent until at least March, many analysts expect further interest rate rises in 2007, which may lead to increases in the cost of borrowing for first time buyers.

"At least one further interest rate increase [is required] in order to keep inflationary pressures in check," said the National Institute of Economic and Social Research.

"For this reason [we think] the Bank of England should … raise the interest rate again," it added.

A recent survey of 50 analysts by Bloomberg found that 43 per cent of respondents believe interest rates will rise to at least 5.5 per cent by March 2007.

In related news, the Bank of England yesterday confirmed that inflationary pressures were less of a concern than investors had previously thought, according to the Financial Times.

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