Bank set to freeze rates

THE Bank of England is set to keep interest rates on hold today for an eighth consecutive month amid conflicting signals on the outlook for the economy.

City economists are unanimous in predicting the Bank's monetary policy committee will freeze base rate at 4.75%, despite speculation that they have further to climb.

MPC members Paul Tucker and Sir Andrew Large are already calling for an immediate quarter-point increase on grounds that a lack of spare capacity in the economy will soon drive inflation higher.

The MPC will weigh buoyant service sector growth and a tight labour market against floundering High Street spending and a struggling manufacturing sector. News on the housing market has been mixed, Nationwide reporting a 0.6% fall in prices in March while Halifax said they rose 0.5%.

Ciaran Barr, chief UK economist at Deutsche Bank, said: 'It is likely the vote will remain split, with dissenting arguments. The economic data, however, are not providing the MPC with much direction. There is evidence of weakness in consumer spending but it is unclear whether this will persist.'

Investec's David Page said: 'News on the month has been dovish with average earnings, retail sales, house prices and mortgage lending on the soft side. We expect rates to be left on hold at today's meeting but May's could be a closer call.'

The European Central Bank is also expected to keep Eurozone rates at 2% today.