Bank of England rejects rate cut – for now

It may have been a close-run thing but the Bank of England's Monetary Policy Committee (MPC) chose to leave UK interest rates on hold at 5.5 per cent last Thursday. In the days before the committee was due to meet, there had been fevered speculation that it would lower the base rate for the second month in a row. Some sections of the business and retail community called for a cut, arguing that the economy and consumer spending were slowing dramatically and action was needed to restore confidence.

On the eve of the decision, high-street retailer Marks & Spencer revealed that its annual sales had slipped. The news was greeted with widespread alarm in the City and led to speculation that the UK was heading towards a recession. Meanwhile, UK housing market surveys from both the Halifax and Nationwide confirmed that prices had fallen during the final three months of 2007.

Despite such data, the MPC decided to keep rates on hold, no doubt because members feared that a cut could fuel inflation and further undermine the economy. Over the next few months, rises in petrol prices and utility bills are expected to add to the cost of living.

Trevor Williams, chief economist at Lloyds TSB corporate markets, said: "Inflation is the key concern of the MPC. They clearly wanted to wait until February's quarterly inflation report for reassurance that the time is right to cut rates again."

It does appear only a matter of time before rates are reduced. Howard Archer, an economist at Global Insight, said he considered it "highly probable that the Bank of England will cut interest rates to 5.25 per cent in February as evidence mounts that the UK economy is faltering".

A 0.25 per cent cut in the base rate would reduce repayments on a £100,000 standard variable-rate repayment mortgage by around £15 a month.

PROMOTED VIDEO
News
business
News
Mick Jagger performing at Glastonbury
people
Life and Style
beautyBelgian fan lands L'Oreal campaign after being spotted at World Cup
Sport
Germany's Andre Greipel crosses the finish line to win the sixth stage of the Tour de France cycling race over 194 kilometers (120.5 miles) with start in Arras and finish in Reims, France
tour de franceGerman champion achieves sixth Tour stage win in Reims
Extras
indybest
Arts and Entertainment
Characters in the new series are based on real people, say its creators, unlike Arya and Clegane the Dog in ‘Game of Thrones’
tv'The Last Kingdom' is based on historical events
Finacial products from our partners
Property search
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    2 x Risk Analysts Required - SAS - Banking

    competitive: Progressive Recruitment: A world leading banking organisation are...

    Brady Business Analyst - Syseca - (EBIS / EDIS) - London

    £500 - £1000 per day: Harrington Starr: Harrington Starr are urgently recruiti...

    Systems Accountant

    £75000 - £100000 per annum: Cameron Kennedy Recruitment: We urgently require f...

    Investment Banking Sales Manager

    £40000 - £50000 per annum + competitive package: Orgtel: Investment Banking Sa...

    Day In a Page

    The true Gaza back-story that the Israelis aren’t telling this week

    The true Gaza back-story that the Israelis aren’t telling this week

    A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
    A History of the First World War in 100 Moments: The German people demand an end to the fighting

    A History of the First World War in 100 Moments

    The German people demand an end to the fighting
    New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

    New play reveals what Oscar Wilde said at trials

    For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
    Can scientists save the world's sea life from

    Can scientists save our sea life?

    By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
    Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

    Richard III review

    Martin Freeman’s psychotic monarch is big on mockery but wanting in malice
    Hollywood targets Asian audiences as US films enjoy record-breaking run at Chinese box office

    Hollywood targets Asian audiences

    The world's second biggest movie market is fast becoming the Hollywood studios' most crucial
    Grindr founder Joel Simkhai: 'I've found love on my dating app - and my mum keeps trying to hook me up!'

    Grindr founder Joel Simkhai: 'I've found love on my dating app'

    Five years on from its launch and Grindr is the world's most popular dating app for gay men. Its founder Joel Simkhai answers his critics, describes his isolation as a child
    Autocorrect has its uses but it can go rogue with embarrassing results - so is it time to ditch it?

    Is it time to ditch autocorrect?

    Matthew J X Malady persuaded friends to message manually instead, but failed to factor in fat fingers and drunk texting
    10 best girls' summer dresses

    Frock chick: 10 best girls' summer dresses

    Get them ready for the holidays with these cool and pretty options 
    Westminster’s dark secret: Adultery, homosexuality, sadomasochism and abuse of children were all seemingly lumped together

    Westminster’s dark secret

    Adultery, homosexuality, sadomasochism and abuse of children were all seemingly lumped together
    A History of the First World War in 100 Moments: Dulce et decorum est - a life cut short for a poet whose work achieved immortality

    A History of the First World War in 100 Moments

    Dulce et decorum est: a life cut short for a poet whose work achieved immortality
    Google tells popular music website to censor album cover art in 'sexually explicit content' ban

    Naked censorship?

    The strange case of Google, the music website and the nudity take-down requests
    Howzat! 8 best cricket bats

    Howzat! 8 best cricket bats

    As England take on India at Trent Bridge, here is our pick of the high-performing bats to help you up your run-count this summer 
    Brazil vs Germany World Cup 2014 comment: David Luiz falls from leader figure to symbol of national humiliation

    David Luiz falls from leader figure to symbol of national humiliation

    Captain appears to give up as shocking 7-1 World Cup semi-final defeat threatens ramifications in Brazil