UK interest rates unchanged at 5%

The Bank of England has decided not to reduce interest rates today so the base rate will remain at the current 5.0%.

The decision by the Monetary Policy Committee (MPC) to leave interest rates unchanged was widely predicted as the threat of inflation looms over the economy.

Recent hikes in food and oil prices is driving inflation to 3%, well above the 2.0% target set for the Bank of England, so the MPC voted to err on the side of caution rather than revive flagging consumer spending.

This decision will disappoint home owners who are experiencing higher mortgage costs whilst the value of their property falls. The House Builders Federation had called for a 0.5% reduction stating that it “is now imperative or rapidly deteriorating conditions in the housing market risk causing a serious economic slowdown, a situation unique in living memory”.