The Bank of England’s Monetary Policy Committee (MPC) has yet again voted to keep interest rates steady at 4.5%.
Today’s announcement was the MPC’s ninth consecutive decision since it cut rates by 0.25% in August 2005. The Bank’s reluctance to raise interest rates was widely predicted by industry insiders and the financial markets.
Minutes from the previous meeting in April revealed that the MPC was almost unanimous in its previous decisions, voting 7-1 in favour of holding rates.
Stephen Nickell was the lone dissenter, saying that he felt rising unemployment and a sluggish economy required a quarter-point cut.
It’s believed that a recovering property market is to be partly behind the Bank’s decision to hold rates for the next month, while this week’s figures showing manufacturers’ recovery from a seven-month low in production in March to their highest output in a year and a half in April also contributed to the decision.
Rising oil prices and increasing fuel bills had been expected by some to influence a rate change; however, though it is keeping an eye on these issues, the Bank is reticent to make any changes for the time being.
Commenting on the Bank of England’s interest rate decision, David Frost, director general of the British Chambers of Commerce (BCC), said: "We are not surprised by today's MPC decision to leave interest rates unchanged at 4.50%, which was very widely anticipated by the financial markets.
“Though the worst may be over for the UK economy, the upturn is very fragile. Businesses struggle in the face of huge burdens, and the recovery is vulnerable to setbacks.”
