19 September 2005
Speculation is receding that the Bank of England (BoE) will cut interest rates again this year, disappointing loans customers who were looking for even lower rates.
The BoE had cut rates by 0.25 per cent in August, but has maintained them at 4.5 per cent this month.
Economists had predicted that there would be a series of cuts, with rates falling to 4.25 per cent by November.
Philip Shaw, chief economist at Investec, told Reuters: "For the time being we expect that jitters over rising inflation and hopes of a consumer upswing will prevent base rates from falling again this year."."(We) would highlight the continuing strength of the labour market as well as the prospect of inflation running close to 3 percent before the year-end as justification for inaction," said Simon Rubinsohn, chief economist at Gerrard.
Alan Clarke at BNP Paribas said: "The housing market and activity data have stabilised more quickly than we expected.
"We now believe the door to further interest rate cuts has been firmly shut."
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