Newspaper article The Evening Standard (London, England)

'Hold' Looks to Be the Rates Call but Rises May Be Just Round Corner

Newspaper article The Evening Standard (London, England)

'Hold' Looks to Be the Rates Call but Rises May Be Just Round Corner

Article excerpt

Byline: JANE PADGHAM

THE Bank of England's monetary policy committee kicks off its latest meeting today with interest rates having been held at 4.75% since August last year. This month's meeting coincides with the quarterly update of the MPC's economic projections, which will be published in its Inflation Report next week. The Bank has a history of being trigger-happy with rates in Inflation Report months, so there are more jitters than usual going into today's meeting.

JANE PADGHAM assesses the items on the MPC's agenda before it delivers its verdict at midday tomorrow.

House prices

After slowing sharply in the second half of last year, the housing market is showing signs of stabilising. Halifax said prices rose 0.8% in January following 1.4% gains in December while mortgage rival Nationwide reported a 0.4% January increase and said the market was poised for a spring revival.

That view was backed by official figures from the Bank showing mortgage approvals are picking up. The upbeat news has raised hopes that a property crash will be avoided.

High Street spending

Retailers' tales of festive woe were backed by official figures confirming the High Street suffered its worst Christmas for 23 years. Retail sales dipped 1% in December as virtually every sector, apart from internet retailing, was hit. The fall came despite reports of widespread discounting.

Retail weakness looks to have extended into the new year, the CBI reporting the worst January for six years and the British Retail Consortium saying like-for-like sales were only 0.5% higher than a year ago.

Growth

The economy ended 2004 on a high note with gross domestic product - a measure of overall economic activity - expanding by a punchy 0.7% in the fourth quarter. That was better than the previous quarter's 0.5% and marked the 50th consecutive quarter of expansion. However, the economy remains chronically unbalanced, the services sector expanding by 1% while production industries shrank by 0.5%. Economists predict a reasonably strong start to 2005 before growth slows later this year.

Manufacturing

News on the longsuffering sector goes from bad to worse. …

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