Interest rates held for another month

Posted: 05 Sep 2008 13:26:38 GMT

The Bank of England will hold interest rates at five per cent for at least another month.

At the end of its monthly meeting, the Bank's monetary policy committee (MPC) concluded that ongoing inflationary pressure made the possibility of any cuts untenable.

The base rate has now been held at five per cent since April.

Barry Naisbitt, chief economist at mortgage provider Abbey said that the decision had been widely expected due to the fact that inflation now stands at 4.4 per cent and continues to rise.

"The majority of MPC members must have judged that the most recent evidence of slowing economic activity provided a balance against the inflation indicators that are high and expected to rise further," he said.

However, price comparison website moneysupermarket.com warned that the Bank of England base rate is increasingly becoming detached from the mortgage market, adding that the decision to stick will have little practical effect on consumers.

Louise Cuming, head of the firm, explained that lenders are becoming more and more independent in their interest rate decisions due to a lack of funding and aversion to risk in the mortgage market.


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