MPC to decide on interest rates
The Bank of England’s Monetary Policy Committee is expected to leave interest rate unchanged at 3.75 per cent today, despite massive increases in credit card debt and a seemingly runaway housing market.
The base rate for lending was raised by a quarter of one per cent in November 2003, from a near 50-year low of 3.5 per cent.
But at its last meeting in December, the MPC voted 8-1 to keep rates on hold.
With inflation well under the new consumer price index (CPI) at just 1.3 per cent, seventy basis points below the two per cent Treasury target, January sales in full swing, rising levels of business optimism and timely expansion in the manufacturing sector, the MPC – which started its deliberations on Wednesday – may think twice about a sudden hike.
Critics of the MPC’s apparent laissez faire attitude claim the current credit boom, which has seen record levels of debt assumed as consumers borrow against the price of their properties, may cause a serious jolt to the economy if interest rates rise to ward off inflationary pressures.
