2 April 2007
Thursday's base rate decision by the monetary policy committee (MPC) is still anybody's guess after last month's decision to retain it at 5.25%.
While most analysts agree that a further rate rise will be needed before the summer, whether or not March sees a quarter point rise is still very much up for debate.
Stephen Smith, Director of Housing at Legal & General, stated that the most likely time for a rate rise would be in June and August, comparing the months to Park Lane and Mayfair on a Monopoly board "because you just want to get through them without having to pay out more money!"
Fionnuala Earley, Nationwide's Chief Economist, called for the MPC to take account of the effects already being felt by the previous rate rises, adding: "The MPC is clearly in hawkish mood, but its members should take some heart that consumers are responding to their recent interest rate decisions."
However, Kevin Hawkins, Director General of the British Retail Consortium, warned that the retail sector had still not seen that much of an improvement, stating: "It would appear that the November and January rate increases have yet to work through to consumer spending."
If the MPC sides with Mr Hawkins's viewpoint, it could decide to raise the interest rate now in an effort to further curb Britons enthusiasm for spending beyond its means and to help lower the consumer price index inflation rate.
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