Newspaper article The Evening Standard (London, England)

Rate Rise on Horizon for MPC - but Not This Time

Newspaper article The Evening Standard (London, England)

Rate Rise on Horizon for MPC - but Not This Time

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 last August. An increase tomorrow would be a shock. Not only has news on the economy been mixed, but the MPC has never moved rates in March in its eight-year history. But the City is braced for a rise sooner rather than later so there are more jitters than usual going into this meeting.

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

House prices

News on the housing market has been varied over the past month but the overall picture is of stabilisation after a sharp slowdown in the second half of last year. Nationwide said prices rose 0.5% in February, adding activity seems to have bottomed out. Mortgage rival Halifax reported a 0.5% fall and said the mixed pattern of monthly rises and falls was consistent with a gradual slowdown.

High Street spending

Retailers' woes continue. Latest official data showed sales rose 0.9% in January, almost offsetting December's 1.1% fall.

But the improvement came at the cost of big discounts and tight margins.

Surveys suggest more gloom in February, the British Retail Consortium reporting like-for-like sales down 0.3% on a year ago.

Manufacturing

Though the longsuffering sector avoided a widely predicted technical recession last year, conditions are far from bright. According to the CBI, output expectations are at their lowest since December 2003, while the Chartered Institute of Purchasing and Supply (CIPS) says activity is the weakest for 18 months. The sector is losing an average of 7800 jobs a month.

Services

The sector, which accounts for about 70% of total economic output, continues to bowl along at a healthy clip. The CBI said business and professional firms, such as airline and telecom companies, saw the value of business increase at the fastest rate for four-and-a-half years over the past three months.

However, CIPS said growth last month lost momentum from recent rapid rates.

Inflation

New Year sales and falling petrol prices helped keep inflation steady at 1. …

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