RBS predicts interest rates to stay static for 2008

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RBS predicts interest rates to stay static for 2008

Tue 8th Jul 2008

Interest rates will stay on hold for the rest of the year, a Royal Bank of Scotland (RBS) economist has predicted.

Ross Walker believes that the Bank of England's monetary policy committee (MPC) will keep rates static, making cuts in the first and second quarter of next year.

Its decision will be announced on Thursday July 10th at noon, following its monthly two-day meeting.

Currently interest is at five per cent, held last month.

Mr Walker said the MPC is "stuck like the proverbial rabbit in the headlights".

He said it couldn't raise rates due to a weakening economy, nor cut them because of rising inflation.

Consequently, it will "do nothing" until it is certain to be moving in the right direction.

According to Mr Walker, the RBS has believed since mid-June, when inflation reached three per cent, that interest rates will be "on hold" for the rest of 2008.

The Royal Bank of Scotland is one of the world's largest financial services groups.

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