UK interest rates held at 5.5%

The Bank of England’s Monetary Policy Committee today voted to maintain interest rates at 5.5%.

The previous change in Bank Rate was an increase of 0.25 percentage points to 5.5% on 10 May 2007.

Ray Boulger of leading independent mortgage adviser, John Charcol, commented: “There is little doubt that the four interest rate rises in the last 10 months are now having the desired effect on the housing market. As we enter the warmer months of the year prices are certainly cooling off, but it remains to be seen whether we have reached the peak of this cycle. The market is absolutely anticipating another rise by August but it is not yet a done deal.

“The majority of economists are calling for a rise in July but if we need another increase it would be more logical for the MPC to wait until the next quarterly inflation report in August before making that decision. With the total previous rise of 1% looking like it is doing the trick, I believe the MPC will want more time to see if this is indeed the case.”

Trevor Williams, chief economist, Lloyds TSB Corporate Markets commented: "We may well see a rate rise before the summer is out, but a move this month was highly unlikely. We've seen rates increased four times since August last year and the effects of these are only just starting to show through - inflation is coming off the boil, the housing market is cooling and signs of slower activity are appearing in the retail sector.

"However, it's still too early to judge the full impact of these cumulative increases, especially those that have taken place in the past nine months. By holding rates the MPC has bought time to gauge the impact of recent increases, before deciding whether or not it needs to make another move."

Mark Blackwell, C& G's head of corporate and specialist intermediary sales, commented: "We may well see a rate rise before the summer is out, but a move this month was highly unlikely. We've seen rates increased four times since last August and these increases are only just starting to show with inflation coming off the boil and new mortgage applications beginning to slow.

"Its still too early to judge the real impact of these cumulative increases so the MPC has opted to hold on rates and buy time before making another move."

Commenting on the impact for buy-to-let, Mark Blackwell said: "For landlords, the decision to hold will provide welcome relief as they will already be feeling the squeeze on rental yields as a result of last month's rise. Landlords should take action now to keep a tight control on costs in order to weather the impact should there be a further rise in coming months."