Bank of England keeps interest rates on hold
February 10, 2008
Following this month’s Monetary Policy Committee meeting the Bank of England has announced that interest rated for October will remain unchanged at 5.75%. This was widely expected by most economists and analysts, although the decision has caused disappointment amongst those that had been calling for a cut in interest rates. This is the third month in a row where interest rates have been kept on hold at 5.75% following July’s quarter point rise, which took the rate up to its current level from 5.5%.
The British Chambers of Commerce is one of the agencies that has called for a cut in interest rates.
One official from the BCC stated: “Following the Northern Rock crisis, the Bank of England must restore its credibility and authority. It must show greater sensitivity to the problems of the wider economy, while at the same time making it clear that it will not yield to outside pressures.”
Although interest rates have not changed for this month, many industry experts do not expect rates to rise further this year, and some also predict that interest rates will actually fall before the year is out.
One official stated: “An interest rate cut was unlikely this month as there are, as yet, few signs of any serious damage to the real economy from the upheaval in the money markets. What’s not in doubt is that the next move will be down.”
The decision to keep interest rates on hold will provide breathing space for mortgage payers that may have been worrying about mortgage repayments rising again. The current turmoil in the financial markets coupled with the decreased rate of CPI inflation are thought to have contributed to the Bank of England’s decision to keep rates on hold.
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