All 56 economists polled by Reuters expect Bank of England policymakers to keep interest rates at 5.75 per cent this week, amid signs that some calm is returning to markets after the Northern Rock crisis.
However, two-thirds of analysts expect the central bank to have trimmed borrowing costs
by early next year, once policymakers have had more time to assess the impact of higher borrowing costs and tighter credit conditions on the wider economy.
The FTSE 100 index of leading shares finished on Friday at 6466.80 points, up 10.1 points or 0.16 per cent from a week earlier. The FTSE had soared by 2.66 per cent in value the previous week.
The bank froze rates last month, arguing that it was too soon to judge the economic fallout of the worldwide credit squeeze. However, the central bank remains on alert over inflation, analysts said.
Since the middle of last month, commercial banks have become nervous about lending to each other because of the ongoing credit squeeze.
The banks are concerned about bad investments linked to US home loans, which has led to a shortage of cash for lending purposes.
- REUTERS
