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Bank holds interest rates

The Bank of England has held interest rates at 5.5 per cent.Following May's quarter-point hike to the current base rate, the monetary policy committee (MPC) approved the hold in their June meeting earlier today.The decision comes as no surprise to analysts, who have pointed out the significant psychological impact two successive rate hikes would have on consumers' spending. Two years have passed since the last time consecutive rises took place.Interest rates have gone up from 4.5 per cent this time 12 months ago following hikes in August and November last year and January and May this year.Although a relief for homebuyers, borrowers, retailers and others today's vote is more of a temporary rather than permanent reprieve.The Bank's most recent inflation report included the assumption of a further rise in the base rate in the next few months to tackle the problem and speculation is already beginning as to whether this hike will take place next month."We suspect that another 25 basis point hike to 5.75 per cent could arrive as soon as July," Howard Archer of research firm Global Insight said."Despite some tentative signs that higher interest rates may be starting to dampen consumer spending and slow the housing market, we believe that the MPC is likely to act by August at the latest to try to stamp out the significant upside risks to longer-term price stability."Consumer price index (CPI) inflation broke the upper acceptability threshold of three per cent in March, before falling back to 2.8 per cent in April.

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