Warning against rate cut

An economist has warned that the current risk of inflation means the Bank of England's monetary policy committee would be wiser not to cut the base rate this week.

Simon Ward of New Star Asset Management said: "The near-term inflation outlook remains troubling, however, with the May Inflation Report likely to show a larger and more prolonged overshoot than projected in February."

He concluded that this would lead to a vote by six to three against a cut.

Such a decision would be in line with the views of most economists polled by Reuters ahead of the decision.

Of the 65 who the news agency spoke to, only five stated that they thought there will be a reduction in the base rate this time.

Such predictions may come as a blow to those who hoped a cut might lead to lower borrowing costs.

Those who do not want to wait and hope for interest rate reductions may decide to opt of the self build alternative.


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