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Bank opts out of rate cut

The Bank of England decided against cutting interest rates today.Instead, the bank rate is to remain at five per cent, following a meeting of the nine-member Monetary Policy Committee (MPC).Mortgage lenders had called for a reduction - pointing out that mortgages should be made cheaper to repay if the property market was to pick up.House prices have fallen by ten per cent over the past year, while the number of mortgage approvals have dropped by 70 per cent in the same period.However, it is thought that concerns over inflation - which is currently at an above-target 4.4 per cent - have led to the rate hold.Indeed, an MPC member has voted for rates to be raised due to these price concerns at the past two rate-setting meetings.Commenting on the decision Grant Bather, a spokesman from Virgin Money, said: "The decision by the MPC to maintain the Bank of England base rate at five per cent is to be expected."With the governor of the Bank of England confirming that inflation could reach five per cent by December and household bills continuing to rise, the MPC has found opportunities to cut rates limited in recent months."He added: "Holding the rate at five per cent should help to instil a period of stability into the market, but with household bills, food and petrol all rising at inflation busting rates, consumers and businesses will be looking for a cut soon."

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