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Interest rates stay static

The Bank of England yesterday elected to keep interest rates on hold at 5.75 per cent for the third month in a row.Analysts had predicted that interest rates would not change this month, but many are forecasting that the bank's monetary policy committee (MPC) will be forced to cut them later this year, as the effects of the global credit crunch begin to be felt more widely.Many fear that an economic slowdown is underway, a concern that has been exacerbated by news this week from Halifax that UK house prices had fallen 0.6 per cent last month, although annual growth is still in double digits."The MPC was right to hold its nerve," Graeme Leach, chief economist at the Institute of Directors, commented on the decision, adding: "It is still too soon to judge the wider economic fallout from the financial crisis. "There is every reason to believe the UK economy is slowing, but there is far less certainty as to whether the slowdown is sufficient to dispel inflationary risks."

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