Cost of borrowing forecast to inch up

Dan Atkinson|Mail13 April 2012

INFLATION figures due this week will signal whether the next move in interest rates will be up.

Money markets are cutting back what had been heavy bets on a rise in borrowing costs this year, but are still expecting a quarter-point increase in the base rate to 5% by the end of 2005.

Higher oil and commodity prices - combined with buoyant consumer lending - would seem to point towards higher rates.

But weak retail sales during and since Christmas might stay the hand of the Bank of England's Monetary Policy Committee. Wednesday sees the publication of the minutes of its March meeting, at which it voted to leave the base rate at 4.75%.

At last month's meeting, senior Bank official and MPC member Paul Tucker broke ranks and voted for a rate rise.

All previous votes of the nine-member committee had been unanimous since the rate was raised to 4.75% last August.

The price of goods at factory gates increased sharply in the year to February, from 2.6% to 2.8%. But the Consumer Prices Index in the year to January was 1.6%, unchanged on the year to December and well below the Bank's 2% target.

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