Bank of England expected to keep interest rates on hold

LONDON (AFP) - Bank of England policymakers began meeting to decide on the level of British interest rates, amid widespread expectations that the cost of borrowing would remain unchanged at 4.75 percent.
The central bank's nine-member monetary policy committee (MPC) began their two-day gathering in London, with a decision on the main official "repo" rate -- the rate of interest at which the British central bank lends to commercial banks -- due Thursday.
All 31 forecasters polled by AFX News, AFP's financial subsidiary, said they expected the MPC to keep borrowing costs unchanged for the third month in a row following a raft of recent weak economic data.
The committee has raised the cost of borrowing by a quarter-point on five separate occasions since last November, in moves aimed at reining in inflationary pressures stemming from rampant consumer spending, as well as soaring house and oil prices.
But policymakers voted unanimously to leave interest rates unchanged at 4.75 percent last month amid faltering economic growth and moderating house price inflation. The MPC did not even consider a hike, official records showed.
"Rates are likely to remain unchanged," HSBC analysts said.
"For now, with growth softer and consumer inflation benign, the Bank will feel they have time on their hands before they need to act again."
Williams de Broe economist David Smith said Western central bankers were generally reluctant to alter rates towards the end of the calendar year, preferring to wait and see the "strength of retail sales over the important Christmas and New Year periods".

11/03/2004 - 13:53 GMT - AFP