Inflation figures reduce likelihood of rates rise
Nov 16, 2006
Inflation has stabilised, reducing the chances of another interest rate rise in the near future, according to official figures.
Earlier this month, the Bank of England raised the base rate to five per cent, the second rise since the summer, in an attempt to bring inflation nearer to its two per cent target.
Many analysts had predicted that CPI inflation would rise above its September level of 2.4 per cent in October, due a rise in university tuition fees, but figures from the Office of National Statistics reveal that this did not happen.
Chief economist at Global Insight, Howard Archer, said that the unexpected stabilisation in inflation was good news for the bank and obviously reduced the likelihood of another interest rate hike early in 2007, However, the bank was likely to remain on its guard as it was too soon to relax in its war against inflation, he added.
The British Retail Consortium (BRC) said that it was concerned that this month's base rate rise could impact on consumer confidence and decrease spending. BRC spokesman Richard Dodd said that if people were spending more on their mortgage, they wouldn't have ready cash to spend on goods, such as things for Christmas, and were more likely to borrow.
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