MPC holds rates at 5%

The Bank of England’s Monetary Policy Committee (MPC) has decided to keep interest rates at 5%.

The move meets most analyst’s predictions that the risks to inflation were too great to warrant a further cut, with rates having dropped three times in the past six months.

However, some had speculated that a spate of poor economic data might prompt the MPC to act decisively to help stave off a recession.

The announcement will disappoint many homeowners who are facing ever increasing mortgage costs, despite the spate of recent base rate reductions.

Duncan Samuel, managing director of Convex.net, believes the lack of action will harm the property market and says: “Today’s decision to hold the interest rate at 5% has to be disappointing news for a property market already in danger of stalling.

"The lack of activity from lenders is undoubtedly having an adverse effect, so it is clear that very soon the Bank of England will need to do something to bring the Libor rate down to free up mortgages funds.”

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