BoE Holds interest rates at 5 percent

The Bank of England (BoE) has taken the safe option, according to most analysts, by keeping the benchmark interest rate at 5 percent.

Interest rates have been kept unchanged for the second consecutive month today even though the economy is still reducing, coupled with the fact that the housing market fall has not reached the end.

The fact that rates remain unchanged means that Britain’s benchmark rate is still the highest of the Group of Seven nations whilst the European Central Bank kept has retained their rate at 4 percent again today.

Analysts do see this as a temporary stall as they believe that the BoE will soon have to cut rates again to continue to the trend of rate cutting (three times since December), in order to cut the soaring prices and boost the economy back into life.

The Bank’s governor, Mervyn King, has indicated that the current conditions are the most challenging since the formation of the MPC back in 1997 due to the level of inflation and the global nature of the credit crunch, which means that policymakers have a tougher time in influencing and shaping our current economic climate than at any time in the past.

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