UK interest rates held at 5.0%

The Bank of England's Monetary Policy Committee today voted to maintain interest rates at 5.0%.

The previous change in Bank Rate was a reduction of 0.25 percentage points to 5.0% on 10 April 2008.

Barry Naisbitt, Chief economist at Abbey said: "The Bank of England held rates at 5.00% today. Market commentators had considered the decision to be a difficult one. There have recently been further signs of slowing output growth and one Monetary Policy Committee (MPC) member voted for a larger reduction in rates than the 0.25% cut last month.

"Against this, inflation is currently at 2.5% and is expected to rise further in the coming months while measures of inflationary expectations have been rising. I presume that this month the majority of MPC members judged that the most recent evidence of slowing economic activity needed to be balanced against both their expectation that activity would slow and that inflation indicators remain high.

"The Inflation Report, which will be published by the Bank of England later this month, should give a clear guide as to how the Bank sees the economy developing, particularly relative to the forecasts it made in February. If the slowing in economic activity is interpreted as supporting lower inflation in the medium term, a further rate cut could be on the cards, possibly as soon as next month."