Interest rates remain on hold for October

The Bank of England has announced that interest rates for October will remain on hold at 5.75%.

The announcement came after this month's Monetary Policy Committee meeting, which was held on Thursday. Analysts and economists had widely predicted that there would be no change in the interest rate, so the decision to keep rates on hold came as no big surprise to most. However, there had been calls for the Bank of England to cut the interest rate, which many feel that it might do in the coming months.

According to some analysts in the financial sector there are a number of contributory factors that were taken into account by the MPC in its decision to keep interest rates on hold at 5.75%.

One of these was the financial turmoil that has hit the money markets recently, with the Bank of England taking a wait and see stance in order to see what the effect of this turmoil will be on the economy as a whole. In addition to this another contributory factor in the MPC's decision is thought to be the rate of CPI inflation, which has fallen to its lowest level in a year at 1.8%, which is within the government's 2% target.

This is the third consecutive month that interest rates have been kept on hold, with the last rise taking place in July of this year. Many experts predict that the Bank of England will not raise rates further this year, and in fact may actually cut rates.

One official stated: "An interest rate cut was unlikely this month as there are, as yet, few signs of any serious damage to the real economy from the upheaval in the money markets. What's not in doubt is that the next move will be down."

Tom Smith
8th October 2007

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