Bank holds fire on rates


Bank holds fire on rates
Interest rates have been held at 5.5 per cent after the Bank of England resisted calls for a quarter-point cut.

There had been speculation the Bank's monetary policy committee (MPC) would signal its first consecutive rate cut for seven years after several signs of an economic slowdown were observed in 2008.

Rates were cut by 0.25 per cent in December – the first change to base rates since July 2007 – following concerns over the liquidity of credit and the stagnation of inter-bank lending.

Already this year several retailers, including Next, Marks & Spencer and J Sainsbury, have reported disappointing figures for the Christmas period.

Languishing house prices and mortgage approvals have also been echoed in faltering consumer confidence levels.

Today's decision is likely to have been made against the backdrop of reappearing inflationary pressures, with the Bank close to meeting the government's target of two per cent.

However analysts remain convinced that rates will fall over the coming months, most probably in February.

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