The Bank of England yesterday confirmed expectations by announcing its decision to keep interest rates at 5 per cent. Although consumer spending has dropped, with consumer confidence at a record low level, the Monetary Policy Committee have been unable to cut interest rates given the current high inflationary pressure. At 3.3 per cent, inflation is significantly higher than the Bank's 2 per cent target, and is running at its highest level since the Bank of England acquired the power to set interest rates in 1997.
The Bank was left with little option of changing interest rates this month, as a cut would only serve to increase inflationary pressure, whilst an increase would be met with uproar by a financially squeezed general public. By holding the interest rate at 5 per cent, this month's announcement has had little impact on the markets.
The Bank of England have warned that inflation may reach 4 per cent this year, though the problem of inflation isn't specific to England. The European Central Bank increased its interest rates for the first time in a year last week in order to edge out inflation .
Bank of England Holds Interest Rates at 5 per cent
Financial Services > e-banking > Banking news
Bank of England Holds Interest Rates at 5 per cent
Fri, 11 Jul 2008
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