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%, which was widely expected, despite requests from businesses to cut rates following fears about a likely recession in the UK.
Inflation currently stands at 3.3%, well above its 2% target rate, which is why many analysts forecasted rates to remain at 5%.
At the MPC meeting last month, the possibility of increasing rates was discussed in order to dampen inflation. However, none of the members voted in favour.
John Higgins, an analyst at Capital Economics, said today’s decision was no surprise but the Bank should be prepared to cut rates swiftly should further indications of a slowdown emerge.
Lee Hopley, economist at the manufacturing body EEF, agreed with Higgins and added that if the economic downturn gathers speed, the Bank must be ready to slash rates once again.
Since December, the Bank of England have cut interest rates 3 times.
The Halifax has announced today that house prices in the UK fell by 2% last month, and prices are 6.1% lower than they were compared with this time last year.