| UK
Interest Rate: 5.25%
UK
Interest Rates Forecast: No cut expected in March
Rate
Cut Not Expected In March
A
poll by Reuters of 65 economists found that 64/65 of those
surveyed expect rates to be kept on hold when the Bank
of England Monetary Policy Committee meet on the 6th March.
42 of the 65 polled did not expect interest rates
to change again until May, at which point they expected
a 0.25% cut to 5.00%.
33
of the 65 economists expect interest rates to fall to
4.5% by the final quarter of 2008 - but many believe that
rates might rise again to 4.75% in the first quarter of
2009.
Bank's
Lomax Suggests Cuts Possible If Needed - Besley Hints
Not
The
Deputy Governor of the Bank of England, Rachel Lomax,
has suggested that further cuts to interest rates
could be possible in the near future if the risk to economic
growth became serious enough to outweigh
shorter-term inflation risks.
Lomax,
who is responsible for monetary policy at the Bank, emphasised
that although the MPC's job is to keep inflation at its
target level of 2%, "we have discretion to decide
how fast to return inflation to target if it is thrown
off course by a sharp shock, such as the current surge
in world energy prices. So we are not required to raise
interest rates sharply to counteract
the rise in inflation which we expect over the next few
months. We can decide what is appropriate in the light
of all the circumstances."
Lomax
made the comments in a speech at the Institute of Economic
Affairs' 25th anniversary conference.
In
the same week, Tim Besley, another member of the MPC,
said in an interview with thisismoney.co.uk that "we
[the MPC] are really serious about the inflation target".
Besley
stressed that a broader view of the economy is necessary
to take decisions. As an example, he cited the recent
headline-grabbing short-term bad news from the financial
sector. This, he said, should be seen in the context of
how well this sector has done over the last decade.
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