You are here: Home - Saving & Banking - News -

Interest rates unchanged for spring

0
Written by:
23/03/2006

Interest rates have been kept on hold at 4.5% for the seventh month running, with no change likely in April. Paula John reports

The 9-strong Monetary Policy Committee (MPC) voted 8-1 to maintain rates, on the back of continued strength in the housing market offset by lower consumer spending on the high street.

Stephen Nickell was the only MPC member to vote for reducing rates to 4.25%.

The MPC said indicators suggested that gross domestic product for the first three months of the year was increasing above its long-term potential, with business services notably strong.

Committee members said the slightly stronger housing market was being tempered by lower consumer spending, due in part to higher taxes and higher gas prices.

Analyst Rob Carnell from ING said: “We, however, continue to view the recent upturn in housing as a temporary phenomenon.”

“With housing unlikely to provide an offset to the other disinflationary influences over the course of the year, we continue to regard the most probable next direction for UK rates as down, not up,” said Mr Carnell.

However, the MPC is to lose its only current ‘dove’ in May, when Stephen Nickell’s term comes to an end.

He will be replaced by US academic David Blanchflower in June. Blanchflower, like Nickell, is an expert on labour markets. But whether he will take a hawkish or dovish approach to the UK economy remains to be seen.

The MPC is also to lose rate setter Richard Lambert, with immediate effect. Lambert has accepted the position of Director General of the Confederation of British Industry (CBI), a role that would represent a conflict of interest.

The CBI has consistently called for lower interest rates in order to boost the economy but the central bank has not budged since its last quarter point rate cut in August last year.

Lambert’s replacement will be duly announced by the Treasury.

Tagged:

Tag Box

Debt

Pension

Spending

Financial fitness

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Are you a first-time buyer looking for a mortgage?

Look no further, get the help you need by searching for your perfect mortgage

Which ISA is right for you? A round up of the six products available in 2017

From cash to innovative finance to lifetime, here's our guide to the ISA products available to savers this yea...

Guide to buy-to-let tax changes

In late 2015, former Chancellor George Osborne announced a range of  tax measures aimed at landlords, which t...

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Five fund tips for a 0.25% interest rate environment

With interest rates stuck at a record low 0.25% and expectations rates could fall to close to zero, here are ...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Investing your money

Alliance Trust Plc gives you smart insight into how to invest your money

Money Tips of the Week

Read previous post:
BT phone home

Will BT plump for profits or customers if Ofcom’s plans to remove price controls are put in place? Pauline McCallion...

Close