BoE 'in wait and see mode'

The Bank of England (BoE) is in 'wait and see mode' and is likely to leave interest rates unchanged in September, according to a financial research firm.

Global Insight predicted that not only will the monetary policy committee (MPC) refrain from acting this month, it is likely to leave the base interest rate at 5.75 per cent for the foreseeable future.

"Interest rates currently seem highly likely to stay at 5.75 per cent until at least November and there is a strong probability that they will remain unchanged well beyond then," the firm said.

"The ongoing problems and uncertainties in credit and financial markets substantially boost the case for the Bank of England to sit tight for the time being."

These problems are having a direct effect on the mortgage borrowing market, according to Global Insight, with "risky borrowers" having to take out loans at higher rates as lending policies are tightened.

The minutes from the MPC's meeting in August appear to support the analysis firm's belief, with all nine members voting for a rate hold and most saying that they had "no firm view" on whether the rate would need to rise any higher than 5.75 per cent.

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