Rates kept at 5.75%

Interest rates will remain at 5.75 per cent this month, the Bank of England has advised – the second consecutive month that the base rate has been kept at its current level.

The move was widely expected, but has nonetheless resulted in a number of analysts adjusting their forecasts slightly, with many now of the opinion that the next movement will see rates reduced rather than increased again.

However, any such decision is not likely to occur until 2008, it has been advised, with a period of stability now set to follow.

"We now no longer expect interest rates to rise to six per cent in the fourth quarter, but instead anticipate that the Bank of England will sit tight for an extended period," commented Howard Archer of Global Insight.

"I expect the MPC [Monetary Policy Committee] will have discussed the possible need to cut Bank Rate sooner than previously expected as a policy response to the credit crunch and their thoughts on this will be particularly interesting," added Ray Boulger of John Charcol.



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