Bank holds interest rates
Published On 4 October 2007
The Bank of England's Monetary Policy Committee (MPC) has opted to keep interest rates at 5.75 per cent this month.In a move which was widely predicted, the Bank decided to wait and see what the long-term effects on the Northern Rock crisis and the ongoing credit crunch were before altering interest rates.
Barry Naisbitt, chief economist at Abbey, explained: "Financial markets were expecting this decision after last month's unanimous vote to hold rates and the continued uncertainty that there is in financial markets.
"The balance of recent incoming economic activity data has continued to be strong, but there are some signs that the rate rises we have seen may be having an effect.
"Inflation has fallen to 1.8 per cent in August, and the uncertainty created by the turmoil in global financial markets could dampen activity growth, particularly in the US."
Mr Naisbitt added that the current global economic situation meant that it is now more likely that the Bank's next interest rate movement will be downwards.
