Interest rates ''unlikely to rise'' - commercial mortgages

08 December 2006

The Bank of England''s (BoE) decision to maintain interest rates at their present level reflects conditions within the economy, which are unlikely to force rates higher in the near future, the Confederation of British Industry (CBI) reports.

According to Ian McCafferty, chief economic advisor at the CBI, underlying inflation is currently at a stable level, largely due to the strength of the pound, which may benefit investors with commercial mortgages.

Mr McCafferty suggests that although it remains uncertain whether interest rates will rise net year following the "pay round", the BoE will be "in no hurry to change rates again".

A recent report by Lloyds TSB stated that interest rates had not significantly affected business confidence in November, with 59 per cent of UK firms predicting greater activity next year, compared to 56 per cent in the previous month.

Commenting on the survey, Trevor Williams, chief economist at the firm, said that companies expected the bank to raise the base rate of interest in November and had prepared accordingly.