Bank of England Holds Interest Rates
Small Business News – 4th October 2007
The Bank of England has held interest rates at 5.75% despite pressure from some quarters to drop them. Analysts from, amongst others, the Organisation for Economic Co-operation and Development (OECD) and the Ernst & Young ITEM Club had called for interest rates to drop in order to boost the UK eceonomy ahead of an expected slight slowdown in economic growth next year.
The Bank of England’s Monetary Policy Committee held interest rates last month too where the figure has remained at 5.75% since the increase in July. After the last interest rate hold, the US sub-prime market crisis hit the American housing market and the Northern Rock banking crash happened here in the UK.
As a result of the tougher financial lending conditions and economic uncertainty the US Federal Reserve dropped interest rates by 0.5% and the UK was expected to follow suit.
However, the economic outlook in the UK is different from that in the US and the MPC has held fire on an interest rate increase as increased global oil prices and higher food costs as a result of bad weather, have exerted an upward pressure on inflationary figures.