Bank ‘set to hold fire’ on interest rates

The Bank of England looks very likely to maintain the base rate of interest in the UK at its current level of 5.75 per cent, one expert has asserted.

Ahead of the bank’s decision on Thursday September 6th, Howard Archer, chief UK and European economist at Global Insight, is convinced that the cost of borrowing will stay at its present level for a further month.

Interest rates are currently at their highest level for six years and five increases since August 2006 have seen many British borrowers struggling to meet mortgage repayment demands and find a debt solution.

Mr Archer remarked: “The Bank of England is firmly in ‘wait and see’ mode at the moment and seems well set to leave interest rates unchanged for a second successive
month on Thursday.

“The ongoing problems and uncertainties in credit and financial markets substantially boost the case for the Bank of England to sit tight for the time being.”

Figures from the Council of Mortgage Lenders show that there were around 125,000 mortgages in arrears for at least three months at the end of June 2007, which was put down in part to interest rates being “higher than many expected”.