Bank of England leaves rates on hold again

Bank of England leaves rates on hold again

Thursday, January 08, 2004

In a blessing for those using credit to support a Christmas and New Year overspend, interest rates were left on hold for a second month today, despite growing evidence of a sustained return to reasonable levels of economic growth.

Probably waiting for a clearer economic picture from the quarterly inflation report next month, the Bank of England’s Monetary Policy Committee today voted to maintain the Bank's repo rate at 3.75%.

Evidence of weak consumer spending in the run up to Christmas, together with confirmation that the housing market is at last starting to slow, is thought to have helped persuade the MPC to stay its hand for a little longer.

In addition, this week's MPC meeting was the first held under the new inflation target set by the Chancellor last month. Inflation under the new CPI measure is now 1.3% and well below the new 2.0% target, leaving no pressure to raise rates for this reason.

The MPC said in the minutes of its December meeting that a further increase in rates might be needed at some point and most analysts expect the rate to re-continue it’s upward movement soon, probably in February.

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