BoE leave interest rates unchanged at 5.50%
7 June 2007
07.06.07
BoE leave interest rates unchanged at 5.50%
As widely anticipated, the Bank of England kept interest rates on hold at 5.50% at today’s meeting following the decision to raise rates last month. Despite an outside chance of a hike, the committee have decided to adopt a ‘wait and see’ policy following a mixed bag of data over the past month.
The housing market has begun to show signs of slowing with leading indicators such as mortgage approvals and mortgage lending both providing evidence that four rate rises from the Bank of England in the past ten months are beginning to bite. Further weight was added to the argument this morning when the Halifax house price index (+0.3% in May) showed prices rising at the slowest monthly pace this year. Nevertheless, with CPI still running well above the Bank’s 2.0% target rate, the MPC are likely to remain alert to the potential threat of inflationary pressures and thus further tightening is still anticipated in the months ahead.
The market will now await the release of the minutes from today’s meeting (due on 20th June) for an understanding of the committee’s thinking with regards to monetary policy going forward.