Interest rates stay the same

Interest rates have remained on hold at 4.75 per cent.

09:58 10 February 2005

Interest rates have remained on hold at 4.75 per cent.

The base rate has now stayed on hold for the past six months.

Disappointing high street sales over the Christmas and new year period and the ongoing malaise of the manufacturing sector combined to put off another quarter point rise.

At the end of last year there was even talk of a rate cut and some commentators maintain that the next movement will be downwards.

However Simon Rubinsohn, chief economist for Gerrard, expects rates to rise to five per cent in the next few months. "We are pencilling in a rise in May," he said.

Howard Archer, chief economist for Global Insight is of a similar view: "This increases the likelihood that the Bank of England's eventual next move will be to raise interest rates."

But David Frost, director general of the British Chamber of Commerce urged the bank to remain cautious. "Given the underlying risks facing the economy, we urge the MPC to persevere with a cautious and a flexible stance, and reject calls for early interest rate increases," he said.

The MPC's policy of steady rate increases since the end of 2003 appears to have succeeded in taking the heat out of the housing market.

However, there is still concern about consumer debt. High street sales may have fallen short of some expectations in recent months but the British public's love affair with personal loans and credit cards shows no sign of abating.