MPC holds base rate at 5 per cent

  • Story by: Gemma Westacott
  • Magazine: FTAdviser
  • Published Thursday , May 08, 2008

The Bank of England’s Monetary Policy Committee (MPC) has voted this morning (8 May) to maintain the official bank base rate at 5 per cent.

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The decision follows last month's vote on the 10 April to reduce the base rate by 0.25 percentage points to 5 per cent.

Both the Council of Mortgage Lenders (CML) and the Confederation of British Industry (CBI) said they were unsurprised by the MPC decision.

CML director general Michael Coogan said: "We understand the conflict between slowing economic growth and rising inflationary pressures, and the uncertainty over some of the data reflected in the split views of MPC members last month.

"However, the MPC had an opportunity to act to anticipate the worsening economic environment today, and it is disappointing that there has been no change."

Ian McCafferty, the CBI's chief economic adviser, said: "The latest data shows the economy is slowing, albeit only gradually, and at the same time inflationary pressures continue to mount. So, the Bank faced a difficult decision, but it is no surprise that rates were kept on hold this month.

"While the housing market and linked activities are very weak, activity elsewhere is slowing, but is well short of recession. Meanwhile, energy and raw material prices continue to climb, meaning inflationary pressures are intensifying as producers are forced to pass these on."



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