BoE leave interest rates unchanged at 5.50%
10 January 2008
The Bank of England decided to leave interest rates on hold at today's meeting. However the decision was another close call as policymakers juggled the risks of a slowing economy with rising inflationary pressures.
Last month's rate cut of 0.25% was the first cut for two years backed by all nine members of the MPC and came about amid renewed worries in the global money markets. By leaving rates on hold this month, it givees the Bank of England time to take stock and establish how the retail sector faired over the crucial Christmas period and whether the money markets continue to thaw. Since December's interest rate announcement, inter-bank lending rates have fallen dramatically, lessening the urgency for a rate cut. However, the recent depreciation of Sterling will add additional inflationary pressures, as imports become more expensive.
Following today's decision to leaver rates on hold, there is now a high probability that the MPC will look to cut rates in February, when the Bank updates its economic growth and inflation forecasts.