Base rate left unchanged at 5.25%

08 February 2007
The Bank of England's Monetary Policy Committee has voted to leave the base rate at 5.25%, but financial experts are convinced there are further increases ahead.

Despite rises in August and November and a surprise rise last month from 5.0% to 5.25% in an attempt to curb inflation, which had hit an 11-year high, February's rate remains unchanged.

Business groups have welcomed the decision, saying the Bank was right to wait and see the effect of January's rise, and the news will come as welcome relief to homeowners – many of whom nave been hit hard over recent months.

"The Bank is right to hold its fire until the smoke clears and the impact of the recent rises becomes clearer," said EEF chief economist Steve Radley. "Another rise so soon after the last risks spreading unnecessary alarm amongst business and the consumer."

But despite holding fire this month, analysts are predicting more rises still in the near future, and Global Insight chief economist Howard Archer has suggested that the vote to hold the rate at 5.25% may only be a "temporary reprieve", and that rates could raise higher than 5.5% soon.

Minutes from today's MPC meeting will be published on 21 February, and the Bank of England’s latest quarterly inflation report for a guide to the Bank’s thinking will be published next Wednesday.

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