Bank holds rates at 5%
Interest rates were held at five per cent today by the Bank of England.No change has now been made to the bank rate for the past four months, as contradictory economic pressures give the Monetary Policy Committee (MPC) little leeway to take action.Unusually, both a GDP slowdown and a rise in inflation have been measured over the past few months.While a slowing economy generally leads to a reduction in interest rates, the opposite occurs when inflation is on the up.Therefore, the MPC has been faced with a dilemma over what to do with the bank rate - which has been reflected by its decision neither to raise nor lower it.Following the decision, director general of the Council of Mortgage Lenders Michael Coogan commented: "The MPC faced a difficult decision today in the face of rising inflationary pressures and a slowing economic outlook."Holding the Bank rate is better than raising rates, as one MPC member suggested last month, but a reduction would have been a welcome recognition of the current financial strains on households already struggling with hikes in other living costs."
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