BoE keeps key repo rate unchanged at 4.75 pct

The Bank of England today left its benchmark repo rate unchanged at 4.75 pct. The decision was expected. All 35 economists polled by AFX News expected the nine-member rate-setting Monetary Policy Committee to keep borrowing costs unchanged, though they conceded that the debate at the meeting is likely to have been vigorous and the vote tight. The minutes of the two-day meeting, which was the first to include Andrew Sentance, a former chief economist for British Airways PLC, will be released on Wednesday, Oct 18. This was also the first time since March that the Committee will be at full strength. Most analysts think the respite for homeowners will be short-lived, with interest rates likely to rise at the November meeting, when the MPC will have its latest quarterly economic projections to hand. "We expect that the MPC will wait until November so that any decision to raise rates is based on fresh Inflation Report forecasts," said Matthew Sharratt, economist at the Bank of America. Analysts said the Inflation Report is likely to provide enough for the MPC to maintain a tightening bias, with inflation still elevated ahead of the crucial new-year pay bargaining round and growth still somewhat above trend. Only two of the 35 economists polled by AFX News do not anticipate another hike this year following August's first increase in two years. A quarter point rise in November would take the repo rate to 5.00 pct, its highest since September 2001, when the central bank was prompted into cutting rates following the terrorist attacks in the US.