Interest rates set to be held

Interest rates will not be raised to six per cent this month due to economic indicators suggesting that the three rises thus far in 2007 have begun to take effect, market observers suggest.

The Observer-New Star barometer predicts that rates will remain unchanged, with New Star economist Simon Ward telling the broadsheet that he expected all nine members of the Bank of England's Monetary Policy Committee (MPC) to vote against a further hike.

Global Insight chief economist Howard Archer, meanwhile, cites a loss of momentum in the housing, mortgage and manufacturing sectors as being enough to prevent a rise when the MPC meets this Thursday.

But the Lloyds TSB Consumer Barometer reveals that 79 per cent of Britons are still expecting at least one more rise over the next 12 months.

"The interest rate hike in July did little to reassure consumers there was an end in sight to the increases and they widely seem to agree with the prevailing view in financial markets that at least one more hike is on the horizon," advised Trevor Williams, Lloyds TSB Corporate Markets' chief economist.


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