Base rates are likely to remain at 4% until next spring unless the US reduces its own base rate in November, according to Lawrence Sanders, economist at Bristol & West.
In Bristol & West’s regular review of economic data, Sanders noted economic data from both the UK and the US shows ‘slow but sustained recovery’, making a US change less likely.
He said: ‘Recent comments by the US and European Central Bank governors, indicate that an interest rate reduction is not on the agenda at the present moment.’
Domestically, strong consumer spending is continuing to drive the economy, despite further weaknesses in the manufacturing sector.
Sanders said: ‘The manufacturing industry is arguing strongly for a further interest rate cut. However, consumer spending, especially housing-related expenditure, continues to grow well, at levels which support the case for a base rate rise.’