Bank holds interest rates at 5.5%
The Bank of England granted homeowners and businesses a reprieve today by leaving interest rates at 5.5 per cent - a decision the City believes represents merely a pause in the tightening cycle.
By not increasing the cost of borrowing by a further 25 basis points in June, the Bank’s rate setting body has signaled it is prepared to wait and see how effective previous rate rises have been in cooling inflationary pressures.
It may also suggest that next week’s consumer prices report - to which the Bank will have been privy - shows that inflation is easing back as expected.
Consequently any further increase in rates is seen as a question of ‘when’ rather than ‘if’. The last time the MPC opted for consecutive monthly increases was in May and June of 2004, towards the beginning of the current cycle.
