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Jul 13, 2006
The latest BDO
Business Trends Report published by business advisers BDO Stoy Hayward shows
that UK
inflation has continued to increase, with the BDO inflation index rising from
102.1 in April to 107.4 in June following higher price expectations in the
manufacturing sector.
However, despite
above-target inflation, loan borrowers will have a field day as BDO Stoy
Hayward projects interest rates to stay put until the end of 2006. The
organization is predicting that the Monetary Policy Committee (MPC) will keep
rates on hold for the rest of the year as it monitors the continued weakening
of the dollar and uncertainty in world markets.
“There has been
widespread speculation about whether interest rates will increase in July to
combat rising inflation. But we predict that the MPC will adopt a ‘wait and
see’ approach, not just this month, but for the rest of 2006. This will allow
the Committee to assess the full impact of recent fluctuations in the world
financial markets on the UK
economy and monitor any future falls in the value of the dollar,” says Peter
Hemington, partner at BDO Stoy Hayward.
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