BoE Predicted To Hold Interest Rates At 5.75%

The Bank of England are expected to meet tomorrow to determine interest rate policy for next month, with many analysts predicting interest rates to remain at 5.75%.

The Bank of England monetary policy committee is responsible for interest rate policy, and monitoring inflation and economic growth. However, with volatility potentially leading to recession, the Bank is unlikely to risk moving rates either way.

With inflation having fallen dramatically over the course of July to 1.9%, taking it within the government’s ideal target range, and the monetary policy committee unanimously backing keeping interest rates on hold last time around, analysts are predicting that a hold could be on the cards for tomorrow’s meeting.

Also, given the potential impact of any rates move on the credit situation, the Bank of England are likely to want to wait and see how the sub-prime situation progresses before making any radical change.

The Bank is expected to announce its decision tomorrow at midday, after the monetary policy committee meet to discuss their options for the month ahead. With inflation under control, raising interest rates further would logically only be detrimental to the UK economy.

With the Bank of England having already raised interest rates five times this year, and many analysts predicting 6% could be round the corner, the impact on the homeowner of any rate rise could throw the UK market into turmoil.

With credit less available between banks and to business borrowers, many analysts fear that the current situation could plunge the economy into recession, particularly if any further instability were to arise.

The European Central Bank are also expected to be meeting tomorrow, with Eurozone rates also expected to be maintained over the next month for similar reasons to the Bank of England’s predicted outcome.

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