Rates set to remain at 5.75%

Turmoil on the world's financial markets should ensure that the Bank of England does not raise interest rates in the near future, analysts have suggested.

Howard Archer of Global Insight has predicted that rates will not reach six per cent until November at the earliest, and even then advised that another rise is by no means a foregone conclusion.

But David Kern, economic adviser to the British Chambers of Commerce, was even more forthright in his conclusion, warning of the possible repercussions of a further interest rate increase.

"Simply keeping rates on hold next week is not enough, if the decision is interpreted as a mere short-lived postponement of an increase in rates later in the year to six per cent," Mr Kern commented.

"The MPC [Monetary Policy Committee] must acknowledge the growing danger that further interest rate increases could be very damaging," he added.

However, Capital Economics has advised that rates may still rise one more time before the current cycle comes to an end.


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