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September 08, 2005
Bank of England leaves rates unchanged
The Bank of England’s Monetary Policy Committee (MPC) has voted to keep UK interest rates on hold at 4.5%, a decision expected by analysts.
In August, the MPC reduced interest rates by a quarter point, in response to concerns about slowing UK economic growth and consumer spending. However, the economic uncertainty caused by Hurricane Katrina, and the rising cost of oil has increased concerns that inflation could rise.
British Chambers of Commerce director general David Frost said: "Following the much-needed interest rate cut in August, it is natural that the committee should wish to assess the situation before taking further action".
However, Mr Frost said the Bank should "signal clearly" that, if necessary, it would reduce interest rates again.
Howard Archer, chief economist at analysts Global Insight, said the Bank had made it clear that another rate reduction was unlikely in the immediate future, but a further quarter point cut in interest rates remained a possibility before the end of the year.
In August, the MPCs decision to cut rates was opposed by four members, including Bank governor Mervyn King. Mr King argued that cutting interest rates too quickly could push inflation higher, above the Bank's target rate of 2%.
Investec analyst Philip Shaw said: "Economic news since the 4 August easing has been a mixed bag and consistent with rates remaining on hold".
Posted by at September 8, 2005 09:56 PM
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