The bank of England’s Monetary Policy Committee has maintained the base rate of interest at 5.25 per cent, amid fears of inflation after cuts in February and December.
Industry analysts widely predicted the freezing of rates due to the soaring prices of oil, food and household bills. This comes as bad news for Mortgage borrowers who will have willingly anticipated a cut to help with payments.
Edward Menashy, Chief Economist at Charles Stanley Stockbrokers commented that, “Problems are rapidly returning to the credit markets with the three month interbank rate rising to 5.74% from 5.50% (on 07/02/08). 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.”
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