This article is from the source 'bbc' and was first published or seen on . It will not be checked again for changes.
You can find the current article at its original source at http://news.bbc.co.uk/go/rss/-/1/hi/business/7180758.stm
The article has changed 7 times. There is an RSS feed of changes available.
| Version 5 | Version 6 |
|---|---|
| Bank keeps interest rates on hold | Bank keeps interest rates on hold |
| (about 15 hours later) | |
| Bank of England policymakers have decided to keep UK interest rates unchanged at 5.5%. | Bank of England policymakers have decided to keep UK interest rates unchanged at 5.5%. |
| Analysts said the Bank faced a tough decision, having to balance signs of a slowdown in consumer spending against growing inflationary pressures. | Analysts said the Bank faced a tough decision, having to balance signs of a slowdown in consumer spending against growing inflationary pressures. |
| The decision is likely to disappoint some retailers, who had called for a cut after poor Christmas sales figures. | The decision is likely to disappoint some retailers, who had called for a cut after poor Christmas sales figures. |
| While rates have been held this month, many analysts expect the cost of borrowing to be lowered in February. | While rates have been held this month, many analysts expect the cost of borrowing to be lowered in February. |
| 'Right to resist' | 'Right to resist' |
| The Bank's Monetary Policy Committee (MPC) last cut rates in December, reducing them to 5.5% from 5.75%. | The Bank's Monetary Policy Committee (MPC) last cut rates in December, reducing them to 5.5% from 5.75%. |
| A rate cut on Thursday could have lifted both consumer and general business confidence, but it could also have risked fuelling price pressures driven by higher energy and food bills, analysts said. | A rate cut on Thursday could have lifted both consumer and general business confidence, but it could also have risked fuelling price pressures driven by higher energy and food bills, analysts said. |
| Last week, energy firm Npower increased both its gas and electricity prices and warned that its rival energy providers were likely to follow suit. Oil prices have also remained near record highs of more than $100 a barrel. | |
| "Rising energy prices and their knock-on impact on inflation, a slowdown in the housing market and weakening retails were all factors for the MPC to consider," said Trevor Williams of Lloyds TSB Corporate Markets. | "Rising energy prices and their knock-on impact on inflation, a slowdown in the housing market and weakening retails were all factors for the MPC to consider," said Trevor Williams of Lloyds TSB Corporate Markets. |
| "But inflation is the key concern of the MPC and they clearly wanted to wait until February's quarterly inflation report, which brings all of these factors together, for reassurance that the time is right to cut interest rates again." | "But inflation is the key concern of the MPC and they clearly wanted to wait until February's quarterly inflation report, which brings all of these factors together, for reassurance that the time is right to cut interest rates again." |
| "Given the uncertainty over the extent of the economic slowdown, the MPC was right to resist cutting interest rates today," he added. | "Given the uncertainty over the extent of the economic slowdown, the MPC was right to resist cutting interest rates today," he added. |
| 'Missed opportunity' | 'Missed opportunity' |
| The British Chambers of Commerce (BCC) said the Bank had missed an opportunity to underpin consumer confidence, and limit the damage from a global credit crunch and problems in the US mortgage market. | The British Chambers of Commerce (BCC) said the Bank had missed an opportunity to underpin consumer confidence, and limit the damage from a global credit crunch and problems in the US mortgage market. |
| "A modest interest rate cut would have alleviated the threats to the banking system and would have helped restore the smooth flow of credit in the economy," said David Kern, economic adviser to the BCC. | "A modest interest rate cut would have alleviated the threats to the banking system and would have helped restore the smooth flow of credit in the economy," said David Kern, economic adviser to the BCC. |
| We suspect that the vote to leave interest rates unchanged today was extremely close, Howard Archer, Global Insight | We suspect that the vote to leave interest rates unchanged today was extremely close, Howard Archer, Global Insight |
| The manufacturers' organisation EEF said the growing threat of a recession in the US, as well as the effects of the credit crunch on business and consumer confidence, outweighed any reasons for delaying a rate cut. | The manufacturers' organisation EEF said the growing threat of a recession in the US, as well as the effects of the credit crunch on business and consumer confidence, outweighed any reasons for delaying a rate cut. |
| "The evidence from the past month points to a growing risk of a weaker economy and there is little reason to believe the case for a cut will be any less strong next month," EEF Chief Economist Steve Radley said. | "The evidence from the past month points to a growing risk of a weaker economy and there is little reason to believe the case for a cut will be any less strong next month," EEF Chief Economist Steve Radley said. |
| 'Highly probable' | 'Highly probable' |
| The MPC is now widely expected to cut interest rates in February, when the Bank releases its quarterly inflation report including new growth and inflation forecasts. | The MPC is now widely expected to cut interest rates in February, when the Bank releases its quarterly inflation report including new growth and inflation forecasts. |
| "We suspect that the vote to leave interest rates unchanged today was extremely close," said Howard Archer of Global Insight. | "We suspect that the vote to leave interest rates unchanged today was extremely close," said Howard Archer of Global Insight. |
| HAVE YOUR SAY It makes little difference whether interest rates go up or down Sophie Smith, London Send us your comments | HAVE YOUR SAY It makes little difference whether interest rates go up or down Sophie Smith, London Send us your comments |
| He added that it was now "highly probable that the Bank of England will cut interest rates to 5.25% in February as evidence mounts that the UK economy is faltering". | He added that it was now "highly probable that the Bank of England will cut interest rates to 5.25% in February as evidence mounts that the UK economy is faltering". |
| Ian Kernohan, an economist at Royal London Asset Management, said the Bank may even cut rates by half a percentage point, "depending on how bad the news is over the next few weeks". | Ian Kernohan, an economist at Royal London Asset Management, said the Bank may even cut rates by half a percentage point, "depending on how bad the news is over the next few weeks". |