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Base Rate remains at 5.25 per cent for another month

Published On 5 April 2007 at 13:00:04

In a move which is likely to please small and medium-sized businesses with extensive borrowing, the Bank of England has announced that interest rates will remain unchanged in April.

The Monetary Policy Committee met today and voted to keep the Bank of England Base Rate at 5.25 per cent.

Businesses could appreciate the stability that this decision represents - this is the third month in a row that the committee has kept rates stable after a shock increase of 0.25 per cent in January.

"The Bank has weighed up several finely-balanced factors in deciding not to move rates this month," explained Richard Lambert, the director general of the Confederation of British Industry.

"There has been some restoration of profit margins following last year's squeeze yet this is offset by signs of restraint in the annual wage settlement, which suggests underlying inflationary pressures remain under control."

However, experts are already predicting that the move could only be a temporary reprieve for businesses, and that a further increase is likely next month.

"There are signs of renewed vigour in the economy, with continued growth in consumer spending, which means that a rate rise is not out of the question next month," Mr Lambert added.

Similarly, a spokesperson for Lloyds TSB said that it was "hard to see the MPC waiting too much longer before another hike".

 

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