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Bank set to leave rates unchanged
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| Rates: Likely to remain unchanged |
The Bank of England appears set to leave interest rates unchanged at 4.75 per cent when it meets this week.
Following the biggest fall in house prices for over a decade, the monetary policy committee has strong grounds to believe it has taken the sting out of the housing market.
Despite fears over the inflationary impact of oil prices, which could reach $105 a barrel, the Bank appears set to decide against any increase prior to a May 5 general election.
A 'no change' decision on Thursday would mean that rates are unchanged for the eighth successive month.
But the bad news could come for mortgage payers soon after the general election.
At the March meeting two MPC members voted for a quarter point rise, while seven were in favour of leaving rates unchanged.
The City believes the Bank will raise rates at some point - but expects the committee to wait until after a May 5 poll for the next move.
Figures suggest that the house price boom has finally come to an end, with many areas now recording a reduction in property prices.
Data released by the Nationwide building society recently revealed a 0.6 per cent fall in house prices last month.
But analysts say a further rate rise, likely to be 0.25 per cent, has already been priced into their balance sheets for the second half of the year.
The pressure on inflation, stemming from increased oil prices, is likely to further fuel the pressure for a medium term hike in interest rates.
But some predict no change until after June, leaving the Bank some time to assess the real state of the domestic and international economy.
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