Interest rates are likely to be kept at their current level until next year, Barclays Capital has predicted.
Last month the Bank of England’s monetary policy committee voted to keep the base rate at five per cent, the last change having come in April when it was reduced by 0.25 per cent.
Senior UK economist for Barclays Simon Hayes said the rate would be “kept on hold” until early in 2009, forecasting an eventual drop to four per cent by the end of that year.
He added: “It’s going to be very dependent on how the inflation and growth data play out. I think it’s a very precarious situation and I think it is more likely that if we get a movement in the next few months that it will be up rather than down.”
In May the government’s target level of inflation was at 3.3 per cent, up from three per cent in April.
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