BoE raise interest rates by 0.25% to 5.75%
5 July 2007
05.07.07
BoE raise interest rates by 0.25% to 5.75%
As widely expected, the Bank of England raised interest rates by 0.25% to 5.75% at today’s MPC meeting. This follows a knife edge 5-4 vote for no change last month with Governor Mervyn King and Deputy Governor John Gieve joining well established rate hawks Sentance and Besley in voting for a hike stating that, in inflation terms, little had changed since May.
Those members voting to leave rates on hold pointed to the need for measured rate rises given the high level of personal debt and said that there were already signs of the housing market and consumer spending slowing. However, data releases last month contradict this argument with the Nationwide Housing Survey showing prices rising at their fastest pace since January 2005.
The market will now await the release of the minutes from today’s meeting (due on 18th July) for an understanding of the rationale behind today’s move and an indication as to whether further tightening remains likely in the months ahead.