Bank likely to hold rates after growth figures

HOMEOWNERS will be breathing a sigh of relief after economists said the Bank of England would delay any plans for an interest rate rise due to yesterday’s anaemic growth figures.

Markets expectations for a rate rise have already been pushed towards well into the summer, and they are likely to move back further after the Office for National Statistics yesterday said the economy grew by just 0.5 per cent in the first quarter.

Andrew Goodwin, senior economic advisor to the Ernst & Young ITEM Club, said: “The headline figure will provide the doves on the MPC with more ammunition for their arguments in favour of keeping rates at 0.5 per cent.

“With the potential for the second quarter figures to be adversely affected by the extra Bank Holiday we could well be in for another weak outturn when that data is published in three months’ time, so there is little prospect of the committee moving on rates any time soon.”

Philip Shaw of Investec said the growth numbers would “do little to overturn the Bank’s nerves that the economy remains fragile”, adding that an interest rate rise at next week’s meeting was “unlikely”.