Rate change unlikely, business loan customers told

Wed, 06 Jun 2007

A financing analyst has predicted that interest rates will remain unchanged this month, which may come as a relief to many business loan customers.

Trevor Williams, chief economist at financial services provider Lloyds TSB Markets, has said it is "highly unlikely" that the Bank of England's monetary policy committee will vote to raise the base rate when it next meets on Thursday, June 7th 2007.

Explaining this conviction, he pointed out that there are signs that retail activity is slowing, while consumer prices index inflation has been falling.

And he argued that the "full impact" of the Bank's decision to raise interest rates four times since August 2006 needs to be assessed in more detail before lending rates can be altered again.

"The most likely outcome of this month's meeting is that the MPC [monetary policy committee] will opt to hold rates and buy time to gauge the impact of recent increases," he remarked.

As business loan customers may already be aware, consumer prices index inflation hit 3.1 per cent in March - obliging the Bank's governor Mervyn King to write a public letter of explanation to chancellor Gordon Brown.

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