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Bank To Keep Rates On Hold As Economy Flags

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Concern about the pace of economic recovery looks set to persuade the Bank of England to keep interest rates at rock-bottom not just next week but for the rest of the year.

After contracting at the end 2010, the economy has struggled to gather pace. Consumer confidence has tumbled, the labour market is stagnant and the full force of government spending cuts has yet to be felt.

The past few months have seen the collapse of a raft of well-known retail names, including wine seller Oddbins, home improvement firm Focus DIY, and home furnishings retailer Habitat UK. Analysts believe even worse could lie ahead.

While the European Central Bank looks set to raise rates this month -- its second move since April -- all 70 economists polled by Reuters this week predicted that rates would stay at 0.5 percent.

Several have pushed back their rate rise forecasts in the past few days. Barclays Capital, which had expected rates to rise in November, is now plumping for May 2012, and National Australia Bank no longer expects rates to rise before September 2012.

Clearly rampant inflation will help the economy even better.

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  • 433 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?

      • down 5% +
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      • up 5%

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