Interest rates left on hold
May 16, 2008
The Bank of England has announced that interest rates are to remain on hold following this month’s Monetary Policy Committee meeting. The bank cut interest rates in April by 0.25% taking the base rate from 5.25% to 5%. However, most analysts and economists had predicted that the bank would not cut interest rates for two months in a row, so the decision to keep rates on hold for May came as no surprise to most industry professionals.
Whilst many households and industry sectors were disappointed by the decision, officials state that the decision has been a tough one for the central bank. The Monetary Policy Committee has had to consider rising inflation, which is currently significantly higher than the 2% target set by the government, and this means that they have to be careful about cutting interest rates.
At the same time the MPC has to consider the slowing economy, which means that interest rate cuts are needed. Officials state that the decision on rate movements is a fine balancing act for the Bank of England and MPC at the moment. Following the announcement one economist said: ‘Today’s vote was probably very close given the conflicting indicators on the economy and inflation. Although the hawks appear to have won the day this time, the doves will have had plenty to argue about.’
An economist from Global Insight stated: ‘Current elevated inflation levels and risks deterred the MPC from cutting interest rates for a second successive month despite mounting signs that the UK economic slowdown is deepening and widening amid tighter lending conditions.’ He added: ‘It seems odds-on that the Bank of England will trim interest rates from 5.00% to 4.75% in June, thereby maintaining the trend of cutting by 25 basis points every two months.’
- Central bank keeps base rate on hold again The Bank of England has announced that the base rate will be kept on hold for the third consecutive month following this week's Monetary Policy Committee meeting. The decision has come as no great surprise
- Bank of England keeps interest rates on hold 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
- Bank of England keeps interest rates on hold Following this month's Monetary Policy Committee meeting the Bank of England has announced that interest rated for October 2007 will remain unchanged at 5.75%. This was widely expected by most economists and analysts, although the
- BoE holds interest rates for fourth month Following on from the November 8th Monetary Policy Committee meeting the Bank of England has decided once again to keep interest rates on hold at 5.75%. This is the fourth consecutive month that the Bank
- Consumers could be hit by rising mortgage rates from lenders Since August 2006 the base interest rate has risen five times in the UK, taking it from 4.5% to 5.75% in just under one year. Since July of this year struggling homeowners have been relieved
Comments
Got something to say?