As expected the Bank of England's interest rate setting committee
has decided to keep base rate on hold at 4.5%.
Members of the interest rate setting committee will no doubt have concluded
that in the absence of comprehensive information (yet) about consumer
spending patterns during the all-important Christmas holiday season erring
on the side of caution was the correct path to take now.
Adding to the uncertainty has been the relative lack of information regarding
wage settlements - the Bank needing to be reassured first that workers
haven't been negotiating bumper pay deals in response to accelerating
inflation seen last year.
At the moment the general consensus is that there's scope for one further
rate cut this year. However, hopes that it could come as early as next
month now appear to be receding given what information has been coming
out of the High Street. There, better-than-expected trading numbers from
the likes of Carphone Warehouse, Marks & Spencer, Jessops, John Lewis
and GUS have suggested that the Bank may not have overstated Britain's
growth prospects for this year after all. More so, given just published
figures showing manufacturing output hitting a 7-month high.
What may yet give the Bank some wiggle room is the likelihood of inflation
continuing to slow, thereby allowing it to meet its self imposed annual
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