Bank of England base rate left unchanged at 5 percent

For the fourth month the Bank of England kept the main interest rate unchanged at 5 percent, with souring inflation and house prices falling rapidly.

The Monetary Policy Committee, led by Governor Mervyn King said he thinks that inflation will soon quicken to more than double the 2 percent target. Policy makers may have disagreed today that the interest rate should stay at 5 percent, as last month they split three ways.

We could be heading straight into a recession with July being a tough month for the British economy with UK services, manufacturing and construction all having to raise prices, and the house prices slumping the lowest in a quarter of a century.

It’s not looking likely that the bank of England base rate will be cut this year although its thought that they will need to be cut at some point, the monetary committee policy is that if you don’t know which direction to change rates, don’t change them at all, they will want to see inflation on a strong decrease before they cut the rate.

It is possible that British Prime Minister Gordon Brown may implement some tax changes to benefit consumers.

Do you think that the interest rate should have been cut? let us know your thoughts below.
Source: Bloomberg

Read more about the UK interest rate here.