/24-7PressRelease/ - LONDON, UK, February 10, 2006 - The Bank of England retains the interest rate at 4.5% keeping in mind the retail sales and the output enjoyed by the manufacturing and factory units. A positive Christmas spending will mean that the Bank will be unwilling to change its stance. On the other hand if the market assessment reveals a downfall in consumer spending, then we may expect a cut down in interest rates.
In tune with market expectations, the Bank of England has retained the interest rate of 4.5% after its January meeting. The bank's Monetary Policy Committee (MPC) had last cut down the interest rates in August from 4.75% to 4.5%. Since then the cost of borrowing has been kept unchanged at 4.5%.
Official figures showed that UK factory output and manufacturing output enjoyed their share of growth. The bouncing back of retail sales in the run up to Christmas and positive trading statements from big names like Marks and Spencer, John Lewis, Sainsbury and Boots has prompted the bank of England to withhold any plans of a rate cut.
Experts believe that the Bank of England is playing a waiting game and taking its time in assessing the Christmas spending before taking any vital decisions on the borrowing costs.
If a weak Christmas spending is reported, then chances of a rate cut in the near future become stronger. Until then the MPC is going to keep a close watch on the domestic economy especially the consumer spending.
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