UK Interest Rates Kept on Hold at 5%

By: Nadeem_Walayat

In a widely expected move, the Bank of England's MPC meeting kept UK interest rates on hold at 5% following Aprils cut to 5% from 5.25%.

The growing weakness in the UK economy as a consequence of the deepening credit crisis ensures that the Bank of England will continue cutting UK interest rates throughout the year, despite the rise in inflation CPI 2.5%, RPI 3.8%.

Therefore the expectations are now for two further cuts in UK interest rates by September 2008 that will take rates down to 4.5%, marginally below the Market Oracle forecast for UK interest rates to hit 4.75% by September 2008.

The outlook for interest rates post September 2008 will be published later in the year, on further evidence of the actual real impact on inflation by the increase in money supply growth above forecast trend as consequence of the UK Government attempts to bailout the UK banks from the deleveraging of the derivatives bubble following the US housing bust

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Market Oracle Track Record of Calling Monthly Interest Rate Decisions

Month	Market Oracle Forecast	Actual MPC Decision	Outcome
May 08	No Change	No Change
Apr 08	0.25% Cut	0.25% Cut
Mar 08	No Change	No Change
Feb 08	0.25% Cut	0.25% Cut
Jan 08	No Pre-call	No Change	-
Dec 07	0.25% Cut	0.25% Cut
Nov 07	No Change	No Change
Oct 07	No Change	No Change
Sept 07	No Pre-call	No Change	-
Aug 07	No Change	No Change
Jul 07	0.25% Increase	0.25% Increase
Jun 07	No Change	No Change
May 07	0.25% Increase	0.25% Increase
Apr 07	No Pre-call	No Change	-
Mar 07	No Pre-call	No Change	-
Feb 07	0.25% Increase	No Change
Jan 07	0.25% Increase	0.25% Increase
Dec 06	No Pre-call	No Change	-
Nov 06	0.25% Increase	0.25% Increase
Overall Rate Forecast Accuracy			93%

By Nadeem Walayat

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Nadeem Walayat has over 20 years experience of trading, analysing and forecasting the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 120 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

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