Bank of England leaves rates at 5%

by Richard Kilner

Story link: Bank of England leaves rates at 5%

The Bank of England’s Monetary Policy Committee (MPC) has voted to retain the present Bank Rate at 5%.

The decision to leave rates unchanged was widely predicted, with the last change being made in April when a cut of 25 basis points occurred.

The current economic situation for the UK presents the Bank with something of a problem, as inflation (which stands at more than twice the official target) and a slowing economy pulls in different directions.

Economic growth for Q2 of 2008 was revised downwards from 0.2% to 0.0% earlier this year, the worst growth statistic since the first half of the 1990s.

Respected thinktank, the OECD, has also forecast that the UK is likely to enter a recession in the near future, predicting negative growth for Q3 and Q4.

Officially, the Bank of England’s remit is solely concerned with controlling inflation, unlike the Federal Reserve in America, which consider both inflation and the wider economic picture when changing interest rates.

Some have called for the Bank’s remit to be broadened along similar lines.