Breaking news: MPC holds interest rates

INTEREST rates were held again at 0.5% by the Monetary Policy Committee today despite concerns over inflation.

The Bank of England’s rate-setting committee also chose not to expand the £200bn quantitative easing programme.

Their decision means interest rates have now remained unchanged for 25 months.

Business leaders had voiced concern about any rise in interest rates ahead of the latest decision from the Monetary Policy Committee.

With inflation continuing to rise, pressure has been growing on the MPC to raise rates from their historic low.

But business leaders have argued that inflation is largely being driven by external pressures and attention should instead be focused on the strength of the recovery.

Graeme Leach, chief economist at the Institute of Directors, said: “We think the MPC would be correct if it continued to see through this year’s inflation peak, confident that the headline rate would fall back next year.

“Raising interest rates now won’t have any impact on oil and commodity price pressures. The only way to squeeze UK inflation in 2011 would be to raise interest rates to such a degree that we flip the economy back into recession.”