Loans rates hold steady following UK Budget report

Forward loans rates held steady yesterday after UK Chancellor of Exchequer Gordon Brown maintained this year’s economic growth estimate in his annual budget statement, which contained little surprise for the markets.

Stephen Nickell remained the lone voice on the Bank of England’s Monetary Policy Committee calling for a rate cut, as the rate-setting body voted 8-1 to leave rates unchanged at 4.50 percent as expected.

This was the fourth month running that Nickell, who’s term in the MPC is due to end on 31st of May, called for a rate cut. The majority disagreed, however, arguing that it was appropriate to leave rates unchanged given that the outlook was, on balance, for continued growth near trend and inflation close to target. In the end, the minutes suggest that UK rates will stay put for the time being unless the economic backdrop changes significantly one way or another.

Brown said the economy would grow by 2.0-2.5 percent this year, unchanged from the estimate he gave in December’s pre-budget report. He added growth would then pick up to 2.75-3.25 percent in 2007. Chancellor Gordon Brown took centre stage to deliver the country’s annual budget yesterday and left David Cameron, his likely rival at the next election, looking short on substance. Confounding his hard-faced image, Brown cracked jokes in a confident speech setting out his plan for the country’s future.

The budget debate was the first time Brown had squared up to Cameron in parliament. The conservative leader attacked Brown in a short feisty speech – branding him an obstacle to change and accusing him of living in the past.

Bookmark It