Bank of England maintains interest rates at 5.25%

The Bank of England’s Monetary Policy Committee today voted to maintain interest rates at 5.25%.

The previous change in Bank Rate was an increase of 0.25 percentage points to 5.25% on 11 January 2007.

Mehrdad Yousefi, Head of Intermediary Mortgages at Alliance & Leicester: “Today’s MPC decision to maintain the base rate at 5.25 per cent will come as a welcome relief to borrowers, but many market analysts will view this latest decision by the Bank of England as a mere delay of an inevitable further rate rise.

“Inflationary pressures on the economy remain strong, including some above inflation pay deals, and they will play a key part in future base rate decisions. The consensus of opinion is that it is very likely that we will see another rate rise in the first half of 2007, so it is crucial that borrowers assess what impact any possible future base rate rises could have on their finances.

“For borrowers looking for certainty with their mortgage, the best option is to lock in to a competitive fixed rate deal now to avoid the impact of any further rate rises. Borrowers with a bit more flexibility will find some excellent base rate trackers available, priced at least 0.3 per cent cheaper than short-term fixed rates which might suit their financial situation.”

Barry Naisbitt, Chief Economist at Abbey said: "The Bank of England held rates at 5.25% today. Having surprised financial markets and commentators by raising rates to a five year high in January, it seems likely that the members of the Monetary Policy Committee (MPC) might have wanted to pause to see what effects their pre-emptive strike had.

"In addition, the MPC will have weighed up the latest economic news in the light of the background of the higher interest rates. The Inflation Report will be published later this month and will give an indication of how the Bank of England views the prospects are for inflation returning to its 2% target rate this year. In the meantime, however, the MPC will remain concerned about the chance of inflation going above 3% in the early months of this year and will be watching the news on pay settlements and inflation expectations to assess whether it needs to raise rates again in the coming months".