Bank freezes interest rates

Following five quarter point hikes in interest rates since November, the Bank of England has held interest rates steady this month at 4.75 per cent.

12:00 08 September 2004

Following five quarter point hikes in interest rates since November, the Bank of England has held interest rates steady this month at 4.75 per cent.

The move was well trailed by financial experts - of the 83 analysts polled by Reuters and Bloomberg, 82 said they believed rates would stay on hold.

The move to keep interest rates steady comes as the house price inflation that has characterised recent years appears to finally be over.

Halifax, the nation's largest mortgage lender, said that house prices not only stopped growing but fell 0.6 per cent last month.

"The housing market is showing further signs of slowing, retail sales look to be softening, the labour market has weakened over the past two months and CPI inflation is benign. As such, we expected the Bank to keep rates on hold this month," George Buckley, UK economist at Deutsche Bank, explained to Reuters.

Analysts are also predicting that the Bank will forego raising rates again for the remainder of the year - with a possible further quarter-point rise in early 2005 being the last of this economic cycle.

Philip Shaw of broker Investec commented: "If the housing market downturn is genuine this time, we cannot see the MPC raising rates again this year."