Abbey: MPC decision suggests 'wait and see' approach

11 September 2006
Chief economist at Abbey, Barry Naisbitt, has described the Monetary Policy Committee's (MPC) decision to hold interest rates as an indication of its "wait and see" philosophy.

The advisory board recommended holding the base rate of interest at 4.75 per cent after raising the rate by 0.25 per cent last month, a move which has forced many home owners and mortgage holders to rethink their finances.

"The MPC members will probably want to evaluate the incoming economic news and assess whether the change made last month has had any impact on economic activity and inflation expectations," said Mr Naisbitt.

"The economic news over the past month has not been sufficiently dramatic to alter the markets expectations of a further base rate rise, however."

Mr Naisbitt suggested all eyes would be on the November publication of the Inflation Report to see how the MPC would view the upcoming economic outlook, suggesting that he thought opinions on the committee may be split over rate rises or holds in the short-term.

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