Bank of England freezes interest rates

08 April 2005
The Bank of England announced yesterday that it would be keeping UK interest rates at 4.75 per cent for the eighth consecutive month.

The decision by the Monetary Policy Committee (MPC) was anticipated by industry experts - all 87 economists polled by Reuters and Bloomberg correctly predicted that rates would remain the same.

The interest rates freeze follows four interest rates increases imposed by the MPC last year, which put the cost of the average mortgage up by £1,000 and are widely blamed for the slowing housing market.

Any increase in rates now could force the market to collapse - but there is a growing move in favour of a hike in interest rates among MPC members.

In February Paul Tucker voted for an interest rate rise, and this month he was joined by deputy governor Andrew Large.

Economists are predicting a rise as early as next month. "A quarter-point rate hike as early as May is still a distinct possibility," stated Howard Archer, chief UK economist at Global Insight.

However, other observers are expressing concern about the dangers of an increase.

"Prices are now stable across the country with some areas seeing a drop in values," said David Bexon, chief executive of

"Our fear is that a further rise, as predicted by some economists and hinted at by the split in votes at the last committee, could be the catalyst to a serious downturn in the market."

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