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ARTICLE · 19 OCTOBER 2004

Economic Update - Lower Rates Are Coming Much Closer

Roger Bootle's response to October's MPC meeting

United KingdomAccounting and Audit
  • Although the news that the Monetary Policy Committee held interest rates at 4.75% for the second month in a row was no surprise, it will strengthen the suspicion that interest rates are already at their peak. They may be, although think that there is probably still one more rise to come, perhaps in November. But the more important issue concerns what is going to happen after that.
  • The data released in the last month have been consistent with the beginnings of a consumer spending slowdown. Although the quarterly rate of GDP growth was left unchanged in the final release, the increase in household spending was revised down from 1.1% to just 0.6%.
  • And even though August’s 0.6% monthly rise in retail sales completely reversed July’s fall, other indicators are consistent with a significant slowdown in the coming months. Indeed, the reported sales balance of the CBI’s Distributive Trades survey fell from +2 in August to -9 in September and consumer confidence fell from

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