No change in interest rates, experts believe
04 July 2008
A number of experts in the banking field believe that the interest rates will remain the same when the Bank of England announces its decision next week.
The decision, which will be confirmed by the Bank of England's Monetary Policy Committee on Thursday July 10th, will have an effect on a number of personal finance products and could lead to changes in bank loan rates.
Economists at both the Royal Bank of Scotland and Halifax argued that there is unlikely to be a change in rates before the end of the year.
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Senior economist at Barclay's Capital, Simon Hayes, said: "[The Bank has] been caught between two posts: ideally given the possibility of inflation rising to more than twice the target rate they would like to have the freedom to raise rates."
He added that as growth has dropped, the risks of rising rates could lead to the creation of too big an output gap.
And as the committee will be stuck between these two issues, it is likely the interest rate will stay the same, he said.
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