Interest rates 'may have peaked'

Interest rates may have reached their peak after the Bank of England decided to raise rates to a six-year high of 5.75 per cent earlier this month, it has been claimed.

As most house price indices are now reporting continued growth that is nevertheless expected to be tempered by current rises, so too have other economic indicators begun to suggest that earlier rises are now taking effect, according to Simon Ward of New Star Asset Management.

Subdued wage pressures, lower headline average earnings growth and expected increases in mortgage interest rates could all lead to the Bank holding off from further rate rises, Mr Ward noted.

"Recent developments have boosted the chances that rates have peaked at 5.75 per cent," the chief economist at New Star advised.

"Our MPC-ometer statistical model correctly predicted the 6-3 vote for a hike in July and currently suggests that the committee will remain on hold at least until November, even assuming continued robust growth," he added.

Writing in the Times this week, economist Anatole Kaletsky also suggested that financial conditions could mean that rates have now peaked.


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