Financial Advice UK - UK economy News - Bank Of England Keeps Interest Rate At 5%

While today’s decision by the Bank of England MPC was literally a no brainer it does not help the thousands of home owners who are struggling to make ends meet. As we read another report from the...
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UK economy News - Last Updated Thursday 10th July 2008

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Bank Of England Keeps Interest Rate At 5%

Thursday 10th July 2008

It is not surprising to see the Bank of England refrain from moving interest rates higher as the fight against both inflation and a recession continue unabated. While there were many calling for a rate reduction it seems as though the Bank of England would rather remain on the sidelines for the moment and monitor the path of inflation.

Without doubt UK interest rates would be lower than the current 5% if inflation had been under control, but with the cost of living moving higher yet again it seems that the nightmare scenario of 4% plus inflation is not a million miles away. There are now real concerns that unless rates are moved lower in the short term, the UK is set to enter what could turn out to be a major and very painful recession.

The housing market is literally dying on its feet, money is tight on the high street and this is all before we see the expected increase in the unemployment rate – just where did it all go wrong?

As many have pointed out in the last few weeks it seems as though the government did not make plans for the bad times, while they were riding the crest of the economic boom. This has left the public purse drastically short of funding, tax receipts set to nose dive and little left in the pot for the next few years.