News Article - 25 May 2007
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UK interest rates will remain at 5.5 per cent following speculation that a consumer slowdown would prompt a rate cut.

The Bank of England's monetary policy committee (MPC) had to decide how to best handle a slowdown in high street spending and business growth while inflation continues to creep up.

It was in December that the MPC last cut rates, when they were lowered from 5.5 per cent from 5.75 per cent after examining spending, house prices and business productivity.

"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."

According to mortgage broker John Charcol, the rate freeze will cost UK homeowners on a variable rate mortgage about £105 million per month in interest payments.

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