Bank of England holds rate at 5 percent on 100 Mortgages

Today the Bank of England held the base rate at 5 percent. Last month the Monetary Committee which have 9 members were split three ways, David Blanchflower wanted to cut rates, Tim Besley wanted to raise rates to make sure high inflation did not spread through the economy, and the other members wanted the rate the bank of England base rate to stay at 5 percent.

It was hinted that David Blanchflower would have voted this month for a half-point cut in borrowing costs.

Although the rate is staying the same for this month, there is wide speculation that a rate cut could come in November as inflation would have most likely peaked by then, if oil prices continue to fall.
Although, some MPC members could be concerned about the effects on high wage demand if high inflation continues, they may prefer to wait for January to make the cut.

So it looks set that the MPC will hold the rate until they feel that inflation has passed its peak, which some economist’s may not happen until the beginning of next year.

Source: reuters

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