Interest rate future ‘highly uncertain’

The future for the base rate of interest in the UK has been described by one expert as being highly uncertain.

Howard Archer, chief European and UK economist at the analyst firm Global Insight, is convinced that the base rate will be held at five per cent this month but that changes could soon be in the offing.

Indeed, Mr Archer maintains that while the Bank of England will hold fire this month, there is a discernable split with the rate-setting monetary policy committee (MPC).

Members of the MPC disagree over what represents the correct course of action over interest rates, with the case being made for each of the three options available to the committee.

“The Bank of England is currently facing by far the most challenging economic environment since it was granted operational independence in 1997,” said Mr Archer.

Credit consumers and homeowners with debt management concerns will be hoping the bank opts for a reduction in the base rate of interest, which could see their costs cut in months to come.

By Giles Stevenson