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04/04/2002
Interest rates remain unchanged at 4 per cent
The Bank of England have announced that UK interest rates will remain unchanged at a 38-year low of four per cent following the monthly meeting of the bank's Monetary Policy Committee (MPC).
The news was broadly welcomed as the UK, and Europe, continues to slowly edge out of last year's downturn. The CBI's chief economist Ian McCafferty described the mood of the City, saying: "With inflation well under control and pay settlements slowing, the bank had no reason to rock the boat."
The Institute of Directors (IoD) also welcomed the decision, but warned that housing market trends were pointing to rate rise in the next couple of months.
Ruth Lea, Head of the Policy Unit at the IoD, said: "Whilst we welcome today's unchanged interest rates, recent economic data have been firm and point to higher interest rates. Indeed we expect a rise by the end of the second quarter, despite the benign inflationary picture."
The IoD said that strong consumer confidence has led to spiralling credit debts that could force an end to the rate freeze. However, with unemployment dropping to a 26-year low of 3.1 per cent, consumers seem to feel secure in their ability to take on further debt, and lending rose to a record £7 billion in February. Market analysts suspect that the Bank of England have been waiting to see Gordon Brown's budget before committing themselves to a rate hike.
However, the Bank of England announcement will be of small comfort to first-time buyers who wanted to see a cut in the cost of borrowing, especially in London which saw a price rise of 16 per cent in the past year.
Analysts have warned that there remain pitfalls for the MPC in the form of higher oil prices – fuelled by the instability of the Middle East's oil producing nations – and the continuing poor showing of the manufacturing sector.
The European Central Bank (ECB) also announced an unchanged interest rate of 3.25 per cent for the fifth month running. A look at the inflation figures gives a clearer snapshot of the depressed European economy, remaining high as it did at 2.4 per cent – 0.4 per cent above the level predicted by the ECB. Nevertheless, ECB President Wim Duisenberg described the interest rate for the eurozone's 12 nations as "appropriate".
(GMcG)
The news was broadly welcomed as the UK, and Europe, continues to slowly edge out of last year's downturn. The CBI's chief economist Ian McCafferty described the mood of the City, saying: "With inflation well under control and pay settlements slowing, the bank had no reason to rock the boat."
The Institute of Directors (IoD) also welcomed the decision, but warned that housing market trends were pointing to rate rise in the next couple of months.
Ruth Lea, Head of the Policy Unit at the IoD, said: "Whilst we welcome today's unchanged interest rates, recent economic data have been firm and point to higher interest rates. Indeed we expect a rise by the end of the second quarter, despite the benign inflationary picture."
The IoD said that strong consumer confidence has led to spiralling credit debts that could force an end to the rate freeze. However, with unemployment dropping to a 26-year low of 3.1 per cent, consumers seem to feel secure in their ability to take on further debt, and lending rose to a record £7 billion in February. Market analysts suspect that the Bank of England have been waiting to see Gordon Brown's budget before committing themselves to a rate hike.
However, the Bank of England announcement will be of small comfort to first-time buyers who wanted to see a cut in the cost of borrowing, especially in London which saw a price rise of 16 per cent in the past year.
Analysts have warned that there remain pitfalls for the MPC in the form of higher oil prices – fuelled by the instability of the Middle East's oil producing nations – and the continuing poor showing of the manufacturing sector.
The European Central Bank (ECB) also announced an unchanged interest rate of 3.25 per cent for the fifth month running. A look at the inflation figures gives a clearer snapshot of the depressed European economy, remaining high as it did at 2.4 per cent – 0.4 per cent above the level predicted by the ECB. Nevertheless, ECB President Wim Duisenberg described the interest rate for the eurozone's 12 nations as "appropriate".
(GMcG)
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Northern Ireland WeatherToday:Mostly dry south and east, patchy light rain west and north through much of the day. A band of heavier rain crosses central and northern parts in the morning Maximum temperature 13 °C.Tonight:Dry in the southeast at first otherwise widespread light rain or drizzle for most, turning to clear spells and a few showers towards morning. Minimum temperature 5 °C.
