In April the MPC voted 7-2 in favour of keeping interest rates unchanged.
According to a Reuters survey, 24 of 32 economists polled predicted the Monetary Policy Committee would cut its rates by 0.25%. Factors for this include a renewed confidence and increased manufacturing orders following the end of the Gulf War. Plus almost all major house price indices are now indicating a slowdown in the housing market, although there are no signs of a housing market crash.
However, the CML’s Market Briefing for May believes that rates will stay the same. Commenting on a possible rate cut, it states: “While weak survey data may have persuaded some MPC members to go for a rate cut, it is likely the majority were buying time at the April meeting, given that the timing of most surveys coincided with the Iraq war. Weak GDP data has increased the risk of a rate cut in May, however stronger than expected retail sales and the quick resolution of the war points to rates staying on hold again this month.”
