Economists predict rate freeze

Posted: 12 Sep 2007 11:13:05 GMT

Homeowners have been given a  boost after UK economists suggested that the base rate of interest may have peaked.

Homeowners have been given a  boost after UK economists suggested that the base rate of interest may have peaked.

According to a snap poll by Reuters, 80 per cent of those questioned said that they do not envisage another rate rise in 2007.

Of the 50 experts questioned, only 11 believe that rates will rise again this year, while one even sees them falling before 2008.

The general consensus was that the Bank of England’s Monetary Policy Committee (MPC) will hold rates at 5.75 per cent for most of next year before bringing them down by 0.25 per cent next winter.

"We now no longer expect interest rates to rise to six per cent in the fourth quarter, but instead anticipate that the Bank of England will sit tight for an extended period," Howard Archer from Global Insight said.

"We suspect that growth will lose momentum over the coming months, and that underlying inflationary pressures will gradually abate. This will become even more likely the longer that the current financial market turmoil continues," he added.

The MPC has held rates at their current six-year high level for the past two months.

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