MPC Leave Interest Rates on Hold
June 5, 2008
As expected, the Bank of England voted to keep interest rates on hold at 5.0%, amid growing concerns over the pace of UK inflation. Since the May interest rate announcement, price pressures have gained further momentum alongside mounting evidence of an imminent economic slowdown. However, in their quarterly inflation report the MPC placed greater weight on recent inflation developments, signalling the Bank’s concern to maintain the credibility of its inflation target. As always, the market will look towards the release of the minutes from today’s meeting in two weeks time to gauge how serious policymakers regard recent inflationary pressures and whether or not there is scope for monetary easing in the coming months. Following the MPC rate announcement the Sterling fell nearly 1% against the USD from its high the previous day.