Bank votes to hold interest rates

The Bank of England has voted to keep the base rate at 5.25 per cent at its monthly meeting.



Although many analysts had expected the Bank's monetary policy committee (MPC) to increase rates in coming months, recent figures showing falls in inflation and the stock market had reduced expectations of an immediate rise.

Chief economist at Lloyds TSB Trevor Williams said that it had been hard to imagine anything but a hold on interest rates this month.

"Over the past few weeks we've had a mixed bag of economic data, which will have contributed to the decision to hold," he explained.

"We've had strong mortgage approvals but weak retail sales. And of course there's inflation itself, which although still above target, has fallen from three per cent to 2.7 per cent in the past month."

However, he added that with a budget due this month and uncertainty remaining about the effect of the three recent rate rises on economic activity, the future was uncertain, with the MPC likely to want to see more data before deciding what to do next.

Consumers with loans and other forms of borrowing are likely to welcome the MPC decision as it means the interest rates on their credit may not rise immediately, although the base rate could still rise in months to come.

© See Terms and Conditions