The Bank of England does not tinker with interest rates, this time! |
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Tue, 10 May 2005 07:00
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As widely expected the Bank of England (BoE) has chosen to keep the interest rate at 4.75 percent despite fears that such a move would adversely affect the already struggling economy.
The BoE's Monetary Policy Committee announced the decision to keep the interest rates unchanged for the ninth month running after its monthly meeting on Monday. Analysts say that this move is on predictable lines and comes as no surprise.
David Frost, director-general of the British Chamber of Commerce, expressed relief that the rates were not tinkered with, "Most recent economic figures point to slowing activity, weakening domestic demand and lower confidence," he said. He asked the MPC to keep this rate going for another three months at least and not bow to mounting pressure from traders and analysts alike and hike the rates prematurely.
| John Shepperd, economist at Dresdner Kleinwort Wasserstein says, "Clear evidence of slower growth in domestic demand means that the window of opportunity for a policy tightening is closing fast." Analysts are worried about the slump in retail, house market and consumer spending data. They have forecast a slowdown in the economy; this news will not delight Tony Blair, who rode on the economic success plank to his third consecutive term in office.
Meanwhile, a study conducted by the Experian Business Strategies. a forecasting group has found that even though people are regaining confidence in their own finances, they would rather save it than spend it, "People are more cautious about taking on further credit and a cooler housing market is depressing sales of household goods. We expect slower consumer spending growth and retailers of durable goods in particular will face a harder year in 2005," the group said.
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