Experts unsurprised at interest rate decision

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Experts unsurprised at interest rate decision

Fri 11th Jul 2008

Financial experts have said they expected the decision to leave UK interest rates at five per cent.

The Bank of England's monetary policy committee (MPC) decided yesterday to leave the rate unchanged.

A spokesperson for the Fair Investment Company said the decision had been "fairly expected" and confirmed many economists' views that the MPC "is more concerned about rising inflation than the slowing domestic economy."

While a cut might have improved consumer confidence, it was difficult with such high inflation, he said.

Since mortgage lenders have not passed on the two cuts made earlier this year, "a further one was unlikely to have had much effect on mortgage availability anyway".

Scottish Widows Investment Partnership said the announcement was "widely expected" for the same reasons.

In a statement, it predicted the UK economy to slow "quite sharply" and for inflation to rise in the second half of this year, "with some likelihood that it could exceed four per cent".

Cutting interest rates in the short term would be "difficult" in such a climate.

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