Abbey: Base rate decision was expected

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Abbey: Base rate decision was expected

The Bank of England's decision to maintain the base interest rate at five per cent was largely anticipated, according to comments by Abbey.

Concerns about rising inflation rates were likely balanced by the need to react to a slowing economy, the bank said.

During the month of April, consumer price inflation increased from 2.5 per cent to three per cent.

"The monetary policy committee (MPC) has clearly signalled its concern that higher inflation may feed through into elevated inflation expectations," Abbey commented.

It added that the MPC minutes will likely provide some more information on how the base rate decision was made.

Meanwhile, Abbey said that a further rate cut could occur later in 2008, depending on whether inflation continues to rise.

The last base interest rate cut made by the MPC was in April of this year.
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