No change expected for UK rates
The Bank of England is expected to keep interest rates on hold at 5.75% later while it assesses the economic impact of the recent financial turmoil.
Most experts believe policymakers will adopt a "wait-and-see" policy on rates until a clearer picture emerges of the effects of the global credit squeeze.
But some analysts have called on the Bank to trim rates, to counter an expected economic slowdown next year.
The US Federal Reserve cut rates by a half-point earlier this month.
Financial uncertainty
The move was prompted by concerns about the impact on the US economy of the slump in the housing market and the consequent instability in financial markets.
Where next for interest rates?
Members of the Bank of England's Monetary Policy Committee voted unanimously to keep rates on hold last month before the Northern Rock banking crisis unfolded.
The committee has to weigh up concerns about keeping inflation in check against signs that the UK economy is being hurt by uncertainty over how the banking sector will cope in the face of tougher market conditions.
Several influential bodies, including the Organisation for Economic Co-operation and Development (OECD) and the Ernst & Young Item Club, have called for rates to be cut to give a timely boost to the economy.
Graph showing direction of interest rates
But one analyst said the prevailing economic conditions in the UK were not the same as in the US, where the Fed had followed such a course.
"We believe the Bank of England will remain very wary for now about trimming interest rates, given that current elevated oil prices and higher food prices as a result of the bad weather seem likely to exert upward pressure on inflation," said Howard Archer, chief economist at Global Insight.
"The Bank of England is unlikely to be influenced by the Fed's actions as the UK economy is in a different stage in the cycle to the US economy."
Source: bbc.co.uk
Please post any news stories about IVAs here:
http://www.iva.co.uk/forum/default.asp?CAT_ID=5
See my Blog:
http://ivanews.blogs.iva.co.uk
