Base rate stays at 5.5%

Posted: 07 Jun 2007 15:32:12 GMT

The Bank of England has decided to keep interest rates at 5.5 per cent, providing some relief for mortgage-holders on variable rate deals.

The Bank of England has decided to keep interest rates at 5.5 per cent, providing some relief for mortgage-holders on variable rate deals.

Meeting today, the bank's monetary policy committee (MPC) apparently decided to see what the further effect of the last four interest rate rises would have on mortgage lending rates, rather than raise the base rate again.

Although the decision has been welcomed by those concerned about the financial situation of homeowners, the consensus opinion appears to be that it is a temporary measure, and that another rates rise will arrive in the coming months.

"The Bank of England's decision to leave interest rates unchanged may well prove to be only a temporary reprieve, as we suspect that another 25 basis point hike to 5.75 per cent could arrive as soon as July," said Howard Archer of market analysts Global Insight.

"Despite some tentative signs that higher interest rates may be starting to dampen consumer spending and slow the housing market, we believe that the MPC is likely to act by August at the latest to try to stamp out the significant upside risks to longer-term price stability."

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