MPC holds rates

Published: May 08, 2008

The Bank of England's Monetary Policy Committee (MPC) has decided to maintain the base rate of interest in May.

Members of the MPC met today (May 8th) to announce the decision, which means that rates remain at five per cent.

However, it is widely expected that the Bank will opt to cut rates again in June, potentially leading to a drop in mortgage interest rates.

This month's decision was widely expected and the MPC appears to be adopting a bi-monthly approach to cutting rates.

Interest rates have fallen three times in the last six months, bringing mortgage interest rates down with them in many cases.

Trevor Williams, chief economist at Lloyds TSB Corporate Markets, said that he thinks the Bank will continue to take a 'softly, softly' approach.

"The Bank of England is now likely to hold out until the economic picture becomes clearer," he commented.

"Before deciding to cut rates again, it will want more evidence that the economy is slowing; more understanding of the effects of its recent efforts to revive credit markets; and crucially, a better view of whether rising commodity prices are pushing up consumer price inflation," added Mr Williams.