Hopes of new rate cut are fading

SIGNS of resurgent confidence in the service and retail sectors today dashed any hopes of an imminent Bank of England interest rate cut.

Two cautiously upbeat surveys were the final pieces of evidence to be considered by the monetary policy committee in this week's meeting to decide on the cost of borrowing. An overwhelming majority of economists forecast that Thursday's decision will be for no change to the current 4% rate.

While High Street sales growth slowed in February for the second consecutive month, the CBI poll showed retailers more optimistic about the coming months than at any time since last May. Managers were at last planning to increase investment in their companies and anticipated a return to accelerating corporate growth this month.

Meanwhile, the Chartered Institute of Purchasing and Supply's snapshot of the service sector reported the strongest expansion since last June, a major turnaround after the dismal four months following 11 September. Hotels and restaurants were the biggest winners while transport companies said increased spending on the railways had boosted their businesses.