Base rate cut hopes dashed

Any hopes those wanting to see mortgage rates lowered had of the Bank of England's monetary policy committee (MPC) cutting interest rates were dashed yesterday.

The MPC fulfilled the predictions of economists by holding the base rate for the fourth successive month, as it sought to balance between the contrasting perils of rising inflation and falling economic growth.

Commenting on the decision, Scottish Widows Investment Partnership said that increasing fuel bills are "likely to push inflation up to around five per cent over the next couple of months making it difficult for the Bank to justify an immediate rate cut".

Only from September onwards will inflation start to wane, with the next base rate cut not coming until 2009, the firm predicted.

Those looking to get a new home but concerned by the cost of mortgages may decide to use the self build method to save money.

Minutes of the MPC meeting will be published on August 20th.