Interest rates stay at 5.25 per cent

by Catherine Woods - Thursday, 6th March 2008 -

The Bank of England has decided to leave interest rates unchanged for another month. The base rate remains at 5.25 per cent. Here’s what’s been said about the decision.

"The MPC is well aware of the intensifying short-term inflationary pressure from rising food and energy costs and needs to balance this against the weakening of the economy we are experiencing.

"It is worrying that public expectations of inflation are rising and may yet feed through, via wages, into a more ingrained pick up. Holding rates shows the Bank is determined not to compromise its mandate.

"But the slowing economy and the implication for inflation further out does suggest that, following January's decision, another cut in interest rates will be needed and I would expect it sooner rather than later."
CBI chief economic adviser Ian McCafferty

“Problems are rapidly returning to the credit markets with the three month interbank rate rising to 5.74 per cent from 5.50 per cent on 7 February. Bank shares are beginning to decline again despite the better than expected figures and the more generous dividend payouts. Concern is rising.

“Rising commodity prices will probably oblige the Governor to write a letter of explanation as to why the inflation target has been missed by the autumn.”
Charles Stanley chief economist Edward Menashy

Picture source

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