Savers set for further interest rate pain
THE Bank of England is preparing to disappoint savers hoping for a longawaited rise in interest rates this week, according to almost every economic forecaster.
Speculation mounted that an increase in the base rate was on the cards after three members of the eight-strong Monetary Policy Committee voted for a rise at its meeting last month. However since then GDP growth has slowed to 0.3pc and rising inflation, which had worried some rate-setters, went into reverse, dipping from 2.9pc to 2.6pc.
On top of that Kristin Forbes, one of the MPC members in favour of an increase in interest rates, has left the panel. Analysts now expect a six to two majority in favour of holding the base rate at 0.25pc.
The Bank may even trim its longerterm inflation forecasts as companies indicate the sterling-driven surge in their import costs has peaked.
“Even a small rate hike could have repercussions for the economy in its current fragile state,” said Christian Schulz at Citi.