UK interest rates held at 5.75%

The Bank of England’s Monetary Policy Committee today voted to maintain interest rates at 5.75%.

The previous change in Bank Rate was an increase of 0.25 percentage points to 5.75% on 5 July 2007.

Stephen Leonard, Director of Mortgages at Alliance & Leicester, said: “Today’s interest rate decision shows that Bank of England continues to take a cautious mid to long-term view about inflation. Any future decision to reduce interest rates will be made once the bank has a clearer view on how the recent turbulence in world markets affects the economy.

“For borrowers looking to remortgage or take out a new mortgage this month, a tracker mortgage is a sound option in the current interest rate environment. However, borrowers opting for a tracker mortgage should ensure they are financially comfortable enough to withstand an increase in monthly payments should there be any future rate rises.”

Barry Naisbitt, Chief Economist at Abbey said: "Financial markets were expecting this decision after last month’s unanimous vote to hold rates and the continued uncertainty that there is in financial markets. The Monetary Policy Committee (MPC) minutes are likely to give some guidance on policy thinking and next month’s Inflation Report should provide some key insights into how the MPC members are viewing the possible implications of recent events for the economy and interest rates.

"The balance of recent incoming economic activity data has continued to be strong, but there are some signs that the rate rises we have seen may be having an effect. Inflation has fallen to 1.8% in August, and the uncertainty created by the turmoil in global financial markets could dampen activity growth, particularly in the US.

"As a result, the focus of a few months ago on the possibility of higher rates is changing to the discussion of whether rates will be cut. I expect that the MPC will want to see how the economic picture develops before deciding to act on rates."