Rates Steady in UK and Europe
Interest rates remain steady in both the UK and the European Union.
The move to keep rates at 5% was widely anticipated in light of inflationary pressures and fairly difficult economic data. Whilst the UK has seemed fairly resilient to the effects of the global credit squeeze, there are still factors that may yet play their part: Manufacturing figures fell in March as did retail sales, raw material costs are rising and the financial squeeze is being felt by both small business and consumers alike.
Of course, whilst the rate freeze was largely expected there were calls for a cut once again. The British Chambers of Commerce, who claimed that most small firms are unaffected by the credit crunch, believed that a rate cut would have helped support confidence and limited any potential damage to the economy, or as a spokesman for BCC put it:
“This decision was a mistake given the serious threats to economic growth."
Seeing as there was no rate cut this month, the base rate is expected to be cut to 4.75% in June.
In Europe, the European Central Bank kept rates at 4%. The Eurozone’s interest rate has remained constant for 11 months in a row and the Eurozone itself is under inflationary pressure with rates currently at 3.6%.