Poll tips base rate hold

Last month saw three members of the Bank of England’s Monetary Policy Committee (MPC) voting for a base rate rise, but this will not lead to an increase this month, it has been predicted.

In news that may provide some relief to people facing the threat of repossession, all 61 economists interviewed by the Bloomberg news agency said there will be no change to the cost of borrowing when the body decides the rate this Thursday (March 10th).

The view may be based on concerns about the strength of the UK economy, following its contraction in the final quarter of 2010, something that could prompt the MPC to hold off from any increase until at least after they see proof of growth in the first three months of this year.

Bloomberg noted the comments of chief economist at PricewaterhouseCoopers (PwC) John Hawksworth, who said the Bank “shouldn’t immediately be raising rates because of the fragility of the recovery”.

He added: “If they raised this week or May that would be overkill. August or November is reasonable.”

This comment came as PwC and the British Chambers of Commerce both cut their economic growth predictions for 2011.

However, those struggling with mortgages and the possibility of repossession may note any delay is just as stay of execution, as Mr Hawksworth’s view would still entail at least one rate rise this year.

Therefore, debt management plans may be a timely and useful way to prepare for such a situation emerging in the months ahead.

During last month’s MPC meeting, it was noted that some of those not voting for a rate hike still agreed the case for it had “grown in strength”, suggesting some may be wavering.

By James Francis