Interest rates kept at 4.75 per cent

10 May 2005
Mortgage holders breathed a collective sigh of relief yesterday when the Bank of England voted to keep interest rates on hold at 4.75 per cent for the ninth consecutive month.

The decision by the Monetary Policy Committee (MPC) was delayed for four days to avoid a clash with the General Election, but many economists had correctly predicted the outcome following weak data for retail sales and manufacturing.

Stephen Andrew, economist at F&C Asset Management, called the decision a "foregone conclusion" on Saturday, predicting that UK interest rates would remain unchanged for the rest of the year.

Whilst two members of the MPC, deputy governor Andrew Large and Paul Tucker, have voted in favour of a hike in interest rates for the last two months, financial experts do not expect the Bank of England to intervene in the near future.

"We believe that the MPC is likely to stay on the sidelines for at least a couple more months while it tries to ascertain whether the economy is just going through a temporary soft patch, or whether it is the start of a sustained slowdown in activity," said Howard Archer, chief UK economist at Global Insight.

Mr Archer suggested that interest rates could even come down in the near future, should business figures continue to project a gloomy picture.

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