Interest rates on hold at 5%

The Bank of England’s Monetary Policy Committee (MPC) has met this morning and decided to keep UK interest rates on hold at 5%.

Most City analysts had predicted that rates would remain unchanged but with a cut to 4.75% in June.

Ian McCafferty, chief economic adviser to the CBI business group, said the latest data shows the economy is slowing, albeit only gradually, and at the same time inflationary pressures continue to mount.

The Bank faced a difficult decision, but it is no surprise that rates were kept on hold this month, added Mr McCafferty.

However, the EEF, the body that represents Britain’s manufacturers, said that the decision to hold rates was only delaying an inevitable cut.

Steve Radley, EEF’s chief economist, said the economy has been through a series of shocks since the credit crisis hit last summer and the Bank has been right so far in responding with a measured approach on rates.

However, despite concerns on inflation, further cuts to interest rates are needed to prevent the economy from drifting towards recession, added Mr Radley.

Even if the MPC does cut interest rates in June, there will little to smile about for many homeowners as reports claim that more than 25% of mortgage lenders have yet to pass on April’s interest rate cut.

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