Bank keeps rates at 5.25 per cent
Published on : 05/04/2007
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The Bank of England has once again voted to hold interest rates at their present level of 5.25 per cent.
Rates have now gone unchanged for three consecutive months after the shock quarter of a percentage point rise recorded in January.
Today's decision had been widely predicted by economists, but many had maintained up until midday that rates could have gone up by 0.25 per cent.
Kevin Hawkins, director general of the British Retail Consortium (BRC), insisted that the Bank had been "right to do nothing".
He claimed: "A rise now would have been very bad news for hard-pressed consumers and spoilt many retailers’ hopes of an Easter boost."
Last month the Bank's monetary policy committee (MPC) cited instability on global markets as a factor in keeping rates at 5.25 per cent, with only one member – David Blanchflower – voting against a no change decision.
But economists say that this month's MPC vote was likely to have been much tighter.
Global Insight's Howard Archer warns that today's decision represents "only a temporary reprieve".
"We believe that it is pretty short odds that the Bank of England will lift interest rates to 5.5 per cent in May as a precautionary measure aimed at containing medium-term inflation risks," he elaborated.
"However, we believe that 5.5 per cent should mark the peak in interest rates as growth loses a little momentum over the coming months and inflation heads markedly lower helped by favourable base effects and the trimming of utility prices."
As well as January's increase, the Bank raised rates a quarter of a per cent in August and November last year.
