The Bank of England recently announced that interest rates in the UK are to remain unchanged at 5.5% for the month of January. This follows an interest rate cut of 0.25% in December, with Monetary Policy Committee members putting concerns over inflation on the back burner due to worries over a slowdown in the economy.
Many industry officials had been expecting another interest rate cut for January as a result of economic worries, and the decision to leave rates unchanged has caused disappointment for many.
Homeowners will be disappointed by the decision to leave rates unchanged, and disappointment has also been expressed by many industry officials.
Following the Bank of England announcement regarding the interest rates one officials from the British Chambers of Commerce stated: “A modest interest rate cut would have alleviated the threats to the banking system and would have helped restore the smooth flow of credit in the economy.”
However, Trevor Williams of Lloyds TSB Corporate Markets stated that the Bank had made the right decision in leaving interest rates at 5,5%.
Following the announcement he said: “Rising energy prices and their knock-on impact on inflation, a slowdown in the housing market and weakening retails were all factors for the MPC to consider. But inflation is the key concern of the MPC and they clearly wanted to wait until February’s quarterly inflation report, which brings all of these factors together, for reassurance that the time is right to cut interest rates again.”
He added: “Given the uncertainty over the extent of the economic slowdown, the MPC was right to resist cutting interest rates today.”
An official from Global Insight stated: “We suspect that the vote to leave interest rates unchanged today was extremely close.”
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