Bank ‘will maintain cost of borrowing’

The Bank of England is likely to maintain the cost of borrowing at its current level when its monetary policy committee meets on Thursday October 4th, according to one expert economic observer.

Lloyds TSB Corporate Markets’ chief economist Trevor Williams expects to see the bank keep the base rate of interest at its current level of 5.75 per cent, despite what he describes as the “ongoing turmoil in world markets”.

If the bank was to maintain the cost of borrowing, the decision would likely come as a relief to the UK’s credit consumers, many of whom are already dealing with debt management difficulties after five rises in the base rate since August of last year.

Mr Williams commented: “The economy remains pretty robust, with growth and retail sales figures both still strong, meaning a rate cut is almost certainly ruled out.

“However, with inflation comfortably under its two per cent target, wage inflation rising slowly – at 3.5 per cent year on year – and continuing turbulence in the credit markets, it is equally certain there will not be a rise,” he continued.

Figures compiled by Grant Thornton recently showed that the UK’s debt management burden now amounts to more than its annual gross domestic product.