Thursday, May 18, 2006
The cost of borrowing is likely to remain the same in the near future, analysts have suggested, following the publication of the minutes of the last monetary policy committee (MPC) meeting.
It has been revealed that the Bank of England body which sets interest rates voted seven to one in favour to keeping the rate at 4.5 per cent, which has been in place since the quarter point cut last August.
"For now the differences between members are minor and, what differences there are, are not being tested as quarterly GDP growth is back around trend and inflation is at target," remarked John Butler, economist at HSBC.
"That means that for now interest rates are on hold but increasingly sterling and import prices are holding the key to the timing and direction of the next move in interest rates,"
The MPC believes the UK economy may be rebalancing, with factors such as higher energy prices and the weakening of the exchange rate leading to this conclusion.
Some analysts believe that this expected rebalancing is to keep borrowing costs on hold for some time.
