Interest rates remain at 5.5pc

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Interest rates remain at 5.5pc

Fri 8th Jun 2007

The Bank of England announced that interest rates would be held at 5.5 per cent yesterday, following the meeting of its monetary policy committee (MPC).

At the beginning of the year, analysts had hoped that 5.5 per cent would present a peak in the current interest rate cycle but many have since confirmed that they expect rates to continue rising this year.

Although the MPC voted to unanimously raise rates by a quarter per cent in May, signalling the fourth rate rise in the last 12 months, it decided to hold off from further rises for at least the next month, suggesting to experts that it is adopting a 'wait and see' attitude.

Inflation is currently at 2.8 per cent, a long way from its two per cent target level and the latest inflationary survey from the Bank of England suggests that further financial tightening will be required to push it down further.

Barclays Stockbrokers reported that 87 per cent of investors believe that the Bank of England will be forced into raising interest rates further, with 45 per cent expecting to see rates reach at least six per cent before the end of the year.

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