Bank of England holds interest rates
Thursday, 08 December 2005 12:00
The Bank of England today said interest rates will be held at 4.5 per cent in December.
It is the fourth month in a row that the Bank's interest rate setting Monetary Policy Committee (MPC) has voted to keep rates on hold, after August's cut.
The decision was far from a controversial one, with the Bank's November inflation report, minutes from last month's MPC meeting, and comments from members of the Bank all strongly indicating that rates would not move again before 2006.
This gave economists almost total confidence in predicting a rates freeze.
All 107 economists polled by the AFX, Bloomberg, and Reuters news agencies predicted a freeze.
"[The] interest rate decision by the Bank of England is one of the easiest ever to call, with unchanged monetary policy being a stone-dead certainty," said Howard Archer, chief UK economist at Global Insight.
Nationwide said that a rates freeze was four times more likely than any other result.
The MPC raises and lowers the underlying cost of borrowing in the UK in an attempt to keep inflation as close as possible to the government's target rate.
Official figures show that inflation is currently above the Bank's target - but this has been boosted by recent surges in fuel prices.
Going forward, the Bank has said that if pay rose significantly over the next couple of months, and retail sales stayed low, interest rates could be cut.
But most economists are predicting that this will not occur until February at the earliest.
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