BREAKING NEWS: Interest rates held at 5%

UK INTEREST rates were held at 5% today by the Bank of England for the third consecutive month.

The Monetary Policy Committee announcement follows a turbulent few days which has seen worries of a recession increase and building firms Redrow, Bovis and York-based Persimmon annouce hundreds of job losses.

Economic experts had predicted rates would remain unchanged after inflation hit 3.3% last month.

Interest rates were last cut in April by a quarter of a per cent from 5.25%.

Ian Williams, policy director at Leeds Chamber of Commerce, said: “Today’s announcement to leave rates unchanged comes as a surprise to many businesses as mounting costs and consumer reluctance to spend is beginning to bite. Indeed the Chamber’s own local survey has highlighted that there was a downward spiral during quarter two this year, and some of the more positive results from quarter one have been reversed.

“This is true, particularly within the domestic market where we have seen a reduction in sales and orders across both manufacturing and service sectors. This further echoes the woes of business, as consumers have less disposable income, therefore a reduction in rates would have helped.
 
“However, with inflationary pressures mounting the MPC had a difficult decision to make and we would now urge the MPC to very closely monitor the economy and not be afraid to cut rates in the coming months.”

Nimble Thompson, regional chairman of the IoD in Yorkshire and the Humber, said: “This was absolutely the right decision. It is far too early to decide whether to move the rate up or down and any change at this time would certainly have sent the wrong message.”

Ian McCafferty, the CBI’s chief economic adviser, said: “It was of little surprise to the markets that the Bank held rates unchanged this month. The MPC needs to continue to stick to its mandate of delivering stability over the medium-term.

“A rate rise now would do little to influence the further rise in inflation expected in the near-term. There is as yet little sign that the rise in commodity prices has had any effect on wage bargaining and hence core inflation.”