Bank of England keeps interest rate steady

Thursday, November 10, 2005

The Bank of England today announced that interest rates would be held at 4.5 per cent, following the monthly Monetary Policy Committee (MPC) meeting.

Most analysts and experts had predicted the outcome, with the house market experiencing something of a revival and retailers beginning to announce more positive sales figures.

Credit Suisse, the worldwide financial services company, said in a statement that economic factors improving certainly influenced the decision.

"Evidence that the economy has been recently gaining momentum has come in the form of stronger retail sales data, while house prices have increased the most in 15 months," the statement said.

"In terms of our expectations going forward, we wait to see further signs on the condition of the UK economy before we begin to anticipate any interest rate increases/decreases."

This lack of conviction from Credit Suisse reflects the way that analysts' predictions have radically changed for November's announcement.

Following October's MPC announcement, there were initially calls for a rate cut in November, but as October progressed into November, economic factors such as high inflation made this less feasible.