Speculation over whether or not the Bank of England will cut interest rates again has mounted with the publication of figures on consumer spending.
The August retail sales figures published by the National Office of Statistics have been described by experts as slumped, showing the annual rate of increase down to 0.8 per cent overall, with an unexpected 1.2 per cent drop in food spending.
Another cut in interest rates would be good news to borrowers who will soon feel the effects of the 0.25 per cent cut on September 8th that left the interest rate at 4.5 per cent, but experts are divided on which course of action will be taken.
The chief UK economist at Capital Economics, Jonathan Loynes, told Reuters: ìWe still expect that the consumer slowdown will prompt more interest rate cuts.”
However the Bank of England maintains that these results, as well as high inflation, will not force their hand. Rate setter Richard Lambert has stressed that ìrates take time to have an impact”.
This stoic stance has resonated with other analysts, who believe, like Alan Clarke at BNP Paribas, that the ìthe door to further interest rate cuts is firmly closed”. In an interview with Reuters he revised his previous forecast of a rate cut in November.
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