September 01, 2003 

Debt worries set to keep rates on hold
By Lea Paterson

GROWING fears over household debt should mean interest rates across Europe stay unaltered this week, as central bankers wrestle with a hard balancing act between concern about faltering economic growth and worries over debt. 
The Bank of England and the European Central Bank are to announce policy decisions on Thursday. City analysts expect key rates to be kept on hold at 3.5 per cent and 2 per cent, respectively. 

Analysts believe the Bank of England Monetary Policy Committee is reluctant to cut rates again for fear of encouraging consumers to go further into the red. Against that must be set growth prospects. However, encouraging signs, for the US at least, emerged from a weekend meeting of world central bankers in Wyoming. Federal Reserve sources last night said they were encouraged by signs of improvement, with the third quarter shaping up to outstrip the second’s 3.1 per cent growth rate. 

The New Economics Foundation, a left-of-centre think-tank, today gives warning of a “first world” debt crisis.