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Interest rates remain on hold

Interest rates remain on hold

Category: Economy

Updated: 08/04/2011
First Published: 07/04/2011

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The Bank of England has announced that UK interest rates have been frozen at 0.5% again.

It means that there has been no change in the measure for 25 months, with the last revision coming in March 2009, when the Monetary Policy Committee (MPC) cut rates from 1.0% to 0.5%.

The MPC also voted not to inject any more money into the economy through its quantitative easing (QE) programme.

Minutes released later in the month will show whether there was a split in opinion amongst the members of the committee.

Against a backdrop of inflation that is more than double the Government's 2.0% target, three MPC members voted to increase rates last month.

There was also one vote to increase the QE programme.

Some commentators had suggested that a rise could come as early as April or May, but Ian Kernohan, economist at Royal London Asset Management, said that was now unlikely.

"Given the recent data on industrial production and construction sectors, we don't expect a GDP number large enough to seal a rate rise in May," he commented.

"We do expect a small rise in interest rates in the latter part of this year, but with growth remaining quite sluggish relative to previous recoveries, we don't think rates will rise by much.

"The expectation is for a move from the lowest Bank Rate in 300 years to the second lowest."

Earlier this week, it was warned that even a slight increase in rates could push many homeowners into a situation where they could no longer afford their mortgage repayments.

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