15-05-2008
Interest rate cut speculation quashed by Bank of England
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The Bank of England has ended any hopes of interest rate cuts in order to spur growth, it has emerged.
According to reports, the governor of the Bank of England Mervyn King, has confirmed that for inflation to be brought back under control, it will be necessary for the UK's economy to slow significantly over the course of 2008.
The Bank's belief was also confirmed that the cost of living in the UK is set to rise, reports the Guardian.
"We still expect the [monetary policy committee] will cut rates by a percentage point or so, but, as inflation expectations surge and the near-term inflation spike climbs ever higher, we now expect that easing will be delayed," said Michael Saunders, a representative from Citigroup.
A number of factors will cause the cost of living to rise in the UK, including the fall in the value of sterling and the rising cost of food.
Interest rates in the UK are currently set at five per cent.