Bank of England to freeze interest rates

07 February 2005
The chief UK economist at financial giant KPMG has predicted interest rates will be kept on hold on Thursday.

Andrew Smith said he believes it is too early for the Bank of England to change the 4.75 per cent UK base rate of borrowing.

"The economy is more or less where the [interest rate setting] Monetary Policy Committee wants it," he explained.

"The housing market has subsided rather than collapsed, consumer spending has moderated and growth overall in the fourth quarter was around its trend rate."

Looking further ahead Mr Smith expects the MPC's new forecast to "have few changes to the figures announced in November when growth was expected to weaken slightly in 2005 before accelerating again into 2006."

Ultimately Mr Smith feels: "It is just too early to say:"

As such: "The MPC will not wish to raise interest rates and risk kicking the consumer if he is already down; but, equally, the committee will be reluctant to cut rates in case the consumer is simply pausing for breath."

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