Bank of England leaves UK Interest Rates on hold at 5.25%

By: Shahla_Walayat

Despite speculation of another rise in interest rates, the Bank of England Monetary Policy Committee decided to keep interest rates on hold at 5.25%, following January's surprise rise to 5.25%. In a wait and see attitude, hoping that January's rise will be enough to curb pay deals and inflation.

However, with CPI inflation already at the ceiling rate of 3%, against a target of 2%. Another rise could occur as early as next month. For further clues the markets will look to the minutes of the MPC meeting and the inflation figures for January to be released later this month. Given the Banks decision the inflation for January is expected to stay put at 3%, as the Bank had advance notice of these figures at this months MPC meeting.

The Market Oracle forecast is for interest rates to hit 5.75% later this year, and had interest rates risen this week, then this forecast would have been revised higher. So whilst borrowers breath a sigh of relief this week, further rises are still on the cards in the following months.

Meanwhile the ECB kept interest rates on hold this month, but signaled in coded language that a rise next month is highly likely from 3.5% to 3.75%.

By Shahla Walayat

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