BoE 'to leave rates unchanged in August'

The Bank of England's monetary policy committee (MPC) is unlikely to increase the base interest rate in August, according to economic analysis firm Global Insight.

A number of factors were referred to in the firm's argument that rates would stay at 5.75 per cent throughout August, including the recent industrial trends survey from the Confederation of British Industry showing that the manufacturing sector lost momentum in July.

Global Insight said that the committee is also likely to consider Nationwide's recent house price report and the British Bankers' Association's mortgage lending figures, which depicted a quiet housing market.

"Current financial market jitters also reinforce the case for no change in interest rates on Thursday," the market analyst continued.

"Significantly, financial market turmoil earlier this year briefly caused even Andrew Sentance and Timothy Besley to switch from voting for a rate hike to a no-change stance at the March MPC meeting, while David Blanchflower actually voted for a cut."

While it said that a rise in the base rate was "very unlikely", Global Insight stressed that it cannot be entirely ruled out, considering above-trend growth in the second quarter of the year and "disappointing" inflation data in June.

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