7 Apr 2005 News Item
As the election looms, interest rates are frozen for the eighth month in a row...
Bank of EnglandAt today's monthly meeting of the Monetary Policy Committee it was decided that interest would remain at the base rate of 4.75 per cent.
With the general election less than a month away, this announcement is not particularly surprising; no doubt the Committee, along with the rest of us, will want to wait and see what happens on 5 May before making any decisions.
The announcement follows the recent Nationwide Consumer Confidence report, which recorded a drop in consumers' confidence across six out of seven indicators. A rise in rates from the MPC now would have damaged this already-dented confidence even further.
Responses to The AnnouncementTUCChief economist Ian Brinkley said: "Steady as she goes is the right approach. With house prices stable, retail sales cooling and manufacturing still in need of as much help as it can get an increase would have been a mistake."
Skipton Building SocietyChief executive, John Goodfellow, commented: "It is next month, when the inflation report is due - which has previously had a great influence on the MPC's discussions - where the chance of a rate increase will be higher."
Lloyds TSB Financial MarketsTrevor Williams, chief economist, said: "This decision to keep the Bank of England's repo rate on hold at 4.75 per cent comes as no surprise. Growth in the housing market and consumer spending have slowed in the past month - a combination which raises concern that any rate rise now would slow economic growth unnecessarily.
"However, a further rate rise still looks possible over the next few months, and possibly in May despite it being an election period."
CBIChief Economic Advisor, Ian McCafferty commented: "The bank has recognised that stability is serving the UK economy well, holding rates for the eighth consecutive month.
"The state of the economy into the Spring is not yet clear so a rate rise would have been both risky and premature.
"The independence of the Bank from the political process is critical to its continued success in keeping inflation low and stable. The delay in next month's decision to avoid election day reflects this."
Minutes of this month's MPC meeting will be published on April 20. The next meeting will finish on the morning of 9 May, with the decision on interest rates announced at midday.