Savers set for fur­ther in­ter­est rate pain

The Sunday Telegraph - Money & Business - - Front page - By Tim Wal­lace

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.

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