Bank Base Rate held at 5.5 per cent in June 2007

The Bank of England's Monetary Policy Committee (MPC) has voted to hold the Bank Base Rate at 5.5 per cent for June 2007.

Mark Leaper at Moneymatchmaker.com said “The MPC could be questioned as for its reasoning for not going ahead with a rate rise when economic indicators are pointing to an inevitable move upwards with rates. Market demands are very strong and because of this demand, retailers have pushed prices up because current conditions mean they can. 2007 has seen the MPC adopt a much more reactive approach, which could be seen as a wait and see tactic, instead of striking proactively and standing still and holding rates today is another example.

“Last month, some of the MPC members were seriously discussing the need to increase rates by 0.5%, but instead they acted cautiously and increased rates by just 0.25%. Having held off this month, one can guess that they may well have been overruled. It would seem that the speculators amongst the committee are choosing to ignore the factors which led their more prudent colleagues to consider the need for more aggressive action. It will be interesting to see how the vote was split by this month."

An industry spokesman said that “The MPC’s decision to hold the base rate at 5.50% this month is unsurprising given last months decision to raise it by a quarter point.

“Reports this month highlight a decline in inflation from the record reaching heights of April and the early signs of a cooling housing market. It, therefore, seems like the sensible decision to offer borrowers some breathing space before the further inevitable increases predicted by many analysts. However, regardless of the amount of breathing space the MPC decides to offer, borrowers will still be left with an impending sense of insecurity as ‘good’ fixed rate deals become few and far between and variable rates remain surrounded by a certain sense of the unknown.”

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