Bank keeps rates at 5.75%

08-Nov-2007

The Bank of England's monetary policy committee (MPC) has voted to keep interest rates on hold for at least another month, it has been announced.

It is the fourth month in succession that the MPC has voted to keep rates at 5.75 per cent.

It is thought that the nine-member committee's decision was influenced by the performance of the economy and the housing market, inflationary pressures and consumer spending levels.

Trevor Williams, chief economist at Lloyds TSB Corporate Markets, believes the bank made the right decision given the current economic climate.

"Although it is true that economic growth may have peaked in the last quarter and is slowing in the current one, there is still some way to go before the MPC would need to wield the knife on base rates," he said.

"And with money supply still growing, strong labour market conditions and continuing robust economic growth, today was clearly not the day for a cut.

"Equally, with early signs that the economy is set to weaken in 2008 and price inflation still comfortably below target, the Bank was never really likely to raise rates," he added.

The news will come as a blow to first-time buyers, as they will have hoped for a rate cut so that the cost of borrowing would be reduced, but Mr Williams believes their luck may be about to change.

He has forecast that the next interest rate movement will "almost certainly be down".

The news comes as Halifax has reported that house prices fell by 0.5 per cent in October.

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