Base Rate unchanged fourth month in a row!
Posted: August 7, 2008, 11:52 am
The Bank of England monetary policy committee (MPC) has left interest rates unchanged at 5% for the fourth month in a row. The news comes as no surprise to economists who predicted that rates would remain the same. The MPC are between a rock and a hard place. Increasing rates would likely slow inflation, which is currently 2% above the governments target and the highest since 1992, but it would increase the economic slowdown and quite possibly result in recession. On the other hand a rate reduction, popular for home owners with a mortgage, will stimulate spending and fuel inflation. Vicky Redwood, a UK economist at Capital Economics believes the MPC is will adopt a 'wait-and-see' approach for the rest of this year.
