| UK
Interest Rate: 5.5%
UK
Interest Rates Forecast: Likelihood of increase to 5.75%
in July or August
Interest
Rates Remain On Hold For June
The
Bank of England will leave interest rates
unchanged for June, it was announced on Thursday. The
Bank's base rate - upon which mortgage interest rates
are based - is currently 5.5%
It
is thought that the bank's Monetary Policy Committee
believe that the impact of previous rate rises is not
yet clear, prompting them to wait a little longer before
deciding on a further increase.
Markets
Still Expecting Further Rate Hikes
Although
the Bank of England has left rates unchanged this month,
most economists expect further rises
over the next few months, with rates likely to peak
at 5.75 or 6 per cent.
Howard
Archer, chief UK economist at Global Insight commented
that "The Bank of England's decision to leave
interest rates unchanged may well prove to
be only a temporary reprieve - We suspect that another
25 basis point hike to 5.75% could arrive as soon as
July."
The
financial markets are also thought
to have priced in further rate rises over the summer.
Consumers
Concerns Growing
Consumer
confidence is still relatively strong, with high street
results only slightly down on previous months. However,
most consumers are expecting further increases in interest
rates and are beginning to become more concerned
about issues such as job security.
A
survey carried out for Lloyds TSB revealed that 70%
of consumers expect interest rates to increase
again this year, and only 7% of the 2000 surveyed believed
that interest rates will be lower in a year's time.
36%
of those questioned also admitted to increased concerns
over job security, believing that employment prospects
would be poorer in a year's time than at present.
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