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Interest rates hold

The Bank of England has held interest rates at 5.75 per cent for a second month running. Analysts and commentators had widely predicted the freeze, based on a sharp fall in inflation in July to 1.9 per cent from 2.4 per cent in the previous month, as well as a desire not to exacerbate fears of credit squeeze. Just over a month ago, many experts were sure that interest would be lifted to six per cent by the autumn, to help control inflation, but at last month's meeting of the Bank of England's monetary policy committee (MPC), all nine MPC members voted to keep rates at 5.75 per cent in August. Stephen Leonard, director of mortgages at Alliance & Leicester, said: "Today's MPC decision to maintain rates at 5.75 per cent was widely expected. "We are still seeing the effects of the previous rate rises filtering through to homeowners and the latest inflation figures are now back below the government's two per cent target. "The MPC will undoubtedly have taken a range of factors into consideration when making its decision on this month's base rate announcement. "For borrowers, today's rate decision will be a welcome relief. For borrowers needing financial security and the ability to budget for their outgoings, a fixed rate mortgage will prove invaluable. "However, for borrowers who are financially flexible, tracker mortgages can still offer good value."

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