17-10-2007
Prospects for interest rate cut recede
A reduction in interest rates before the end of 2008 is looking increasingly less likely, according to reports.
An interest rate cut doesn't seem likely as although inflation remains below the Bank of England's target of two per cent, oil prices have risen to more than $88 (£43.2) a barrel.
Today, the Organisation of the Petroleum Exporting Countries has warned that output over the short-term will not be increased.
Data released by the Office for National Statistics (ONS) showed that in September, the rate of inflation - as measured by the Consumer Prices Index - was settled at 1.8 per cent.
"It is premature to sound the all-clear. We suspect that the bank will only act before the end of this year if it becomes clear that growth is taking a major hit from the credit crunch," said Howard Archer, chief economist for the UK at Global Insight.
"Record-high oil prices and higher food prices seem likely to exert upward pressure on inflation," he added.
Moreover, ONS figures also showed an increase in the cost of a number of foodstuffs last month, with costs rising by six per cent for milk, eggs and cheese and 15 per cent for butter and margerine.