Interest rate cuts are unlikely before next year, it was claimed yesterday.
The gloomy prediction from Experian, the global economic forecasting group, came despite widespread calls in the West Midlands for the Bank of England Monetary Policy Committee to announce a reduction from the present 4.75 per cent. It unveils its latest decision at noon.
Experian said stagnant high street sales, cooling housing markets and slowing demand for credit had signalled an end to further interest rate rises in the short term.
"The tightening of interest rates was intended to rein in household sector extravagance and this seems to be working," said Dr Neil Blake, director of economics and forecasting at Experian. "However, with inflation rates expected to edge above the official target in the coming months, speculation about further hikes is likely to continue, while cuts are not in prospect before 2006."
And ominously he went on: "Slower than expected growth will worsen the UK's large fiscal shortfall and we believe that tax rises will now be unavoidable next March.
"This puts further pressure on incomes and means the consumer weakness is set to continue next year. But with interest rates easing, we expect UK activity to revive and to remain at or above its long-term trend."