Bank of England to freeze interest rates

The vast majority of analysts are predicting that the Bank of England will freeze interest rates at its meeting tomorrow.

12:19 12 January 2005

The vast majority of analysts are predicting that the Bank of England will freeze interest rates at its meeting tomorrow.

If it does hold rates, it will be the sixth month in a row the Bank's Monetary Policy Committee has voted for interest rates to stand at 4.75 per cent.

Of the more than 60 forecasters polled by Bloomberg and AFX, not one has predicted anything other than an interest rate freeze.

But after rates rose five times in ten months from late 2003 to mid 2004, the public seems sceptical that rates will stay on hold.

Lloyds TSB found that 70 per cent of the population expect interest rates to rise.

"There seems to be a strong view among consumers that interest rates are still on their way up, which is at odds with the market view," Lloyds TSB Scotland's Douglas Reid said.

However, following last month's unanimous decision to keep rates on hold by the Monetary Policy Committee, a raft of economic data has pointed towards interest rates moving downwards, if at all.

House prices remained weak in December, with mortgage sales at their lowest level for ten years the month before, and the British Retail Consortium revealed this week that sales on the high-street over Christmas 2004 were at their lowest level since 1994.

Unions have called for interest rate cuts to help Britain's manufacturing sector, and today estate agents added their voices to the call.

Peter Bolton King, chief executive of the National Association of Estate Agents, said: "We believe it is time to bring the base rate back down."

He pointed to weakness in the housing market coupled with drastically reduced consumer spending over Christmas as reasons to cut rates.

The country's largest mortgage lender, Halifax, predicted last week that interest rates would fall twice in 2005, to stand at 4.25 per cent.