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Nationwide predicts another rate freeze

Nationwide predicts there will be no change in the Bank of England base rate at the next meeting of the Monetary Policy Committee on Thursday March 8.

The society says there is a 40% chance of a rate rise and a 60% chance it will remain the same, although it says a rise cannot be ruled out.

Nationwide has also released its consumer confidence index which was broadly stable in February after its recent volatility.

However its path suggests that consumers are responding to the three rates hikes since August.

The Index was up 1 point to 85 in February, but this remains significantly below the 94 recorded immediately before the rate rises and only marginally above the low point of 83.

Consumers expectations of future house price growth saw very little change in February, falling by 0.1% to 3.4%.

The impact of higher interest rates is beginning to have some impact on housing demand and this will feed into lower house price growth as current and potential home owners evaluate their financial position before investing, says Nationwide.

Consumers seem gloomier about the present economic and employment situation as they face higher debt repayments than before the rate rises.

The present situation Index fell by 2 points to 84 in February, its lowest ever level since the index began in 2004.

But consumers view of the economy and employment in six months time bounced back to 86 in February from Januarys 82.

Spending confidence returns with the spending index up from 90 to 94.

Fionnuala Earley, chief economist at Nationwide, says: The Nationwide consumer confidence index seems to be showing that consumers are responding to the three increases in interest rates.

All of the indices are well below the levels recorded before the first rise in rates.

Consumer sentiment remains fairly downbeat, but underlying feelings about jobs and income have not collapsed, which suggest a fairly stable economic background.

“The MPC is clearly in hawkish mood, but its members should take some heart that consumers are responding to their recent interest rate decisions.

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