Press Release Summary: Interest rate will stay on hold for now, but is expected to fall to 4% during 2009.
Press Release Body: London (Shakespearefinance) June 07, 2008: It seems highly unlikely that the Bank of England will be prepared to trim interest rates to 4.75% until August of this year. Even August may well prove premature as consumer price inflation is likely to be near to 4% around that time. Further out, very weak economic activity is likely to lead to inflation retreating markedly and the interest rates eventually falling as low as 4% by mid of next year.
Chief economist at Investec Securities, Philip Shaw told : \'We now believe inflation will rise above 3% for next 8 months, starting in July and peaking its level at 4.2% in September. Under these adverse circumstances it is very difficult to see the MPC bringing rates down in 2008. However in 2009 we believe that inflation will fall sharply as the worst effects of energy and food price increases abate and as a weak economy bears down on price pressures. The Bank rate is going to remain stagnant at 5% for the rest of this year but will fall to 4% in 2009.\'
Edward Maneshy of stockbrokers Charles Stanley: \'Markets in the UK economy are currently anticipating that inflation will rise close to 4% by the end of 2008. There is a good chance that interest rates will be cut to 4.75% in August 2008 which could represent the lowest level for 2008.\'
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