Interest rates in the balance

A RISE in borrowing costs before the summer is looking increasingly unlikely as the Bank of England holds this week what is almost certainly its last meeting to fix interest rates before the General Election.

Money markets were betting on a quarterpoint jump this week, or in the post-election meeting of the Monetary Policy Committee, expected on May 9.

But new evidence of softening consumer demand has forced markets to hedge their bets. Last week, they suggested the odds on a rise by June to be no more than 50-50.

Ross Walker, an economist at Royal Bank of Scotland, said: 'Markets are still saying the risks are on the upside, but they are hedging their bets for a rise by the start of June to no more than a 50 per cent chance.'